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 Laddered, 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

0.33

Correlation Coefficient

IShares 1  Global X

Weak diversification

The 3 months correlation between IShares and Global is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding iShares 1 5 Year and Global X Laddered in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Laddered 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 Laddered 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 9.32 times less return on investment than Global X. But when comparing it to its historical volatility, iShares 1 5 Year is 1.76 times less risky than Global X. It trades about 0.04 of its potential returns per unit of risk. Global X Laddered is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,718  in Global X Laddered on September 13, 2024 and sell it today you would earn a total of  105.00  from holding Global X Laddered or generate 3.86% return on investment over 90 days.

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

iShares 1 5 Year  vs.  Global X Laddered

iShares 1 5

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares 1 5 Year are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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 Laddered

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Laddered are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the 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 Laddered 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.