Correlation Between IShares 1 and Global X

Can any of the company-specific risk be diversified away by investing in both IShares 1 and Global X at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares 1 and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares 1 5 Year and Global X Equal, you can compare the effects of market volatilities on IShares 1 and Global X and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares 1 with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 1 and Global X.

Diversification Opportunities for IShares 1 and Global X

0.02

Correlation Coefficient

IShares 1  Global X

Significant diversification

The 3 months correlation between IShares and Global is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 5 Year and Global X Equal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Equal and IShares 1 is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares 1 5 Year are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Equal has no effect on the direction of IShares 1 i.e., IShares 1 and Global X go up and down completely randomly.

Pair Corralation between IShares 1 and Global X

Assuming the 90 days trading horizon IShares 1 is expected to generate 2.37 times less return on investment than Global X. But when comparing it to its historical volatility, iShares 1 5 Year is 5.59 times less risky than Global X. It trades about 0.13 of its potential returns per unit of risk. Global X Equal is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,247  in Global X Equal on September 23, 2024 and sell it today you would earn a total of  323.00  from holding Global X Equal or generate 14.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

iShares 1 5 Year  vs.  Global X Equal

iShares 1 5

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares 1 5 Year has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, IShares 1 is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Global X Equal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Equal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with IShares 1 and Global X

The main advantage of trading using opposite IShares 1 and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 1 position performs unexpectedly, Global X can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Global X will offset losses from the drop in Global X's long position.

The idea behind iShares 1 5 Year and Global X Equal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.