Correlation Between Global X and IShares Core

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

By analyzing existing cross correlation between Global X Balanced and iShares Core Equity, you can compare the effects of market volatilities on Global X and IShares Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Core.

Diversification Opportunities for Global X and IShares Core

0.97

Correlation Coefficient

Global X  IShares Core

Almost no diversification

The 3 months correlation between Global and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Global X Balanced and iShares Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Equity 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 Balanced are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Equity has no effect on the direction of Global X i.e., Global X and IShares Core go up and down completely randomly.

Pair Corralation between Global X and IShares Core

Assuming the 90 days trading horizon Global X is expected to generate 1.33 times less return on investment than IShares Core. But when comparing it to its historical volatility, Global X Balanced is 1.33 times less risky than IShares Core. It trades about 0.11 of its potential returns per unit of risk. iShares Core Equity is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,419  in iShares Core Equity on October 11, 2024 and sell it today you would earn a total of  976.00  from holding iShares Core Equity or generate 40.35% return on investment over 90 days.

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

Global X Balanced  vs.  iShares Core Equity

Global X Balanced

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Balanced are ranked lower than 5 (%) 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.

iShares Core Equity

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Equity are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global X and IShares Core

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

The idea behind Global X Balanced and iShares Core Equity 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.