Correlation Between IShares Trust and Global X

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

Diversification Opportunities for IShares Trust and Global X

0.9

Correlation Coefficient

IShares Trust  Global X

Almost no diversification

The 3 months correlation between IShares and Global is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and IShares Trust 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 Trust 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 Funds has no effect on the direction of IShares Trust i.e., IShares Trust and Global X go up and down completely randomly.

Pair Corralation between IShares Trust and Global X

Given the investment horizon of 90 days iShares Trust is expected to generate 1.32 times more return on investment than Global X. However, IShares Trust is 1.32 times more volatile than Global X Funds. It trades about 0.12 of its potential returns per unit of risk. Global X Funds is currently generating about 0.12 per unit of risk. If you would invest  4,051  in iShares Trust on August 30, 2024 and sell it today you would earn a total of  317.00  from holding iShares Trust or generate 7.83% return on investment over 90 days.

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

iShares Trust   vs.  Global X Funds

iShares Trust

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, IShares Trust may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Global X Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Global X is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares Trust and Global X

The main advantage of trading using opposite IShares Trust and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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 Trust and Global X Funds 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.