Correlation Between IShares Fundamental and Global X

Can any of the company-specific risk be diversified away by investing in both IShares Fundamental 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 Fundamental 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 Fundamental Hedged and Global X Active, you can compare the effects of market volatilities on IShares Fundamental 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 Fundamental with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Fundamental and Global X.

Diversification Opportunities for IShares Fundamental and Global X

-0.11

Correlation Coefficient

IShares Fundamental  Global X

Good diversification

The 3 months correlation between IShares and Global is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and Global X Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Active and IShares Fundamental 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 Fundamental Hedged 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 Active has no effect on the direction of IShares Fundamental i.e., IShares Fundamental and Global X go up and down completely randomly.

Pair Corralation between IShares Fundamental and Global X

Assuming the 90 days trading horizon iShares Fundamental Hedged is expected to under-perform the Global X. In addition to that, IShares Fundamental is 3.2 times more volatile than Global X Active. It trades about -0.01 of its total potential returns per unit of risk. Global X Active is currently generating about 0.01 per unit of volatility. If you would invest  959.00  in Global X Active on October 4, 2024 and sell it today you would earn a total of  1.00  from holding Global X Active or generate 0.1% return on investment over 90 days.

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

iShares Fundamental Hedged  vs.  Global X Active

iShares Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global X Active

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Active has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Fundamental and Global X

The main advantage of trading using opposite IShares Fundamental and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Fundamental 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 Fundamental Hedged and Global X Active 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.