Correlation Between IShares Ultra and Global X

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

Diversification Opportunities for IShares Ultra and Global X

1.0

Correlation Coefficient

IShares Ultra  Global X

No risk reduction

The 3 months correlation between IShares and Global is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Ultra Short Term 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 Ultra 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 Ultra Short Term 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 Ultra i.e., IShares Ultra and Global X go up and down completely randomly.

Pair Corralation between IShares Ultra and Global X

Given the investment horizon of 90 days iShares Ultra Short Term is expected to generate 1.41 times more return on investment than Global X. However, IShares Ultra is 1.41 times more volatile than Global X Funds. It trades about 0.71 of its potential returns per unit of risk. Global X Funds is currently generating about 0.79 per unit of risk. If you would invest  5,005  in iShares Ultra Short Term on December 29, 2024 and sell it today you would earn a total of  61.00  from holding iShares Ultra Short Term or generate 1.22% return on investment over 90 days.

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

iShares Ultra Short Term  vs.  Global X Funds

iShares Ultra Short

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Ultra Short Term are ranked lower than 55 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, IShares Ultra is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Global X Funds

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 61 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Global X is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares Ultra and Global X

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

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.