Correlation Between IShares Global and Global X

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

Diversification Opportunities for IShares Global and Global X

0.35

Correlation Coefficient

IShares Global  Global X

Weak diversification

The 3 months correlation between IShares and Global is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Infrastructure and Global X Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Infrastructure and IShares Global 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 Global 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 Infrastructure has no effect on the direction of IShares Global i.e., IShares Global and Global X go up and down completely randomly.

Pair Corralation between IShares Global and Global X

Considering the 90-day investment horizon iShares Global Infrastructure is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, iShares Global Infrastructure is 1.75 times less risky than Global X. The etf trades about -0.01 of its potential returns per unit of risk. The Global X Infrastructure is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,909  in Global X Infrastructure on September 15, 2024 and sell it today you would earn a total of  408.00  from holding Global X Infrastructure or generate 10.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

iShares Global Infrastructure  vs.  Global X Infrastructure

iShares Global Infra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Global Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, IShares Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Global X Infrastructure

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Infrastructure are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Global and Global X

The main advantage of trading using opposite IShares Global and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global 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 Global Infrastructure and Global X Infrastructure 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.