Correlation Between Global X and IShares Trust

Can any of the company-specific risk be diversified away by investing in both Global X and IShares Trust 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 Global X and IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global X Funds and iShares Trust , you can compare the effects of market volatilities on Global X and IShares Trust 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 Global X with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Trust.

Diversification Opportunities for Global X and IShares Trust

0.77

Correlation Coefficient

Global X  IShares Trust

Poor diversification

The 3 months correlation between Global and IShares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and Global X 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 Global X Funds are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Global X i.e., Global X and IShares Trust go up and down completely randomly.

Pair Corralation between Global X and IShares Trust

Given the investment horizon of 90 days Global X Funds is expected to generate 0.6 times more return on investment than IShares Trust. However, Global X Funds is 1.67 times less risky than IShares Trust. It trades about -0.02 of its potential returns per unit of risk. iShares Trust is currently generating about -0.13 per unit of risk. If you would invest  3,121  in Global X Funds on December 29, 2024 and sell it today you would lose (49.00) from holding Global X Funds or give up 1.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Global X Funds  vs.  iShares Trust

Global X Funds

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Funds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Global X is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iShares Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Global X and IShares Trust

The main advantage of trading using opposite Global X and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.

The idea behind Global X Funds and iShares Trust 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.