Correlation Between IShares Environmental and Global X

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

Diversification Opportunities for IShares Environmental and Global X

-0.34

Correlation Coefficient

IShares Environmental  Global X

Very good diversification

The 3 months correlation between IShares and Global is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding iShares Environmental Infrastr and Global X Cloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Cloud and IShares Environmental 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 Environmental Infrastructure 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 Cloud has no effect on the direction of IShares Environmental i.e., IShares Environmental and Global X go up and down completely randomly.

Pair Corralation between IShares Environmental and Global X

Given the investment horizon of 90 days IShares Environmental is expected to generate 2.22 times less return on investment than Global X. But when comparing it to its historical volatility, iShares Environmental Infrastructure is 1.64 times less risky than Global X. It trades about 0.05 of its potential returns per unit of risk. Global X Cloud is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,606  in Global X Cloud on September 27, 2024 and sell it today you would earn a total of  866.00  from holding Global X Cloud or generate 53.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

iShares Environmental Infrastr  vs.  Global X Cloud

iShares Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Environmental Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Global X Cloud

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Cloud are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Global X unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Environmental and Global X

The main advantage of trading using opposite IShares Environmental and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Environmental 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 Environmental Infrastructure and Global X Cloud 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.