Correlation Between IShares Expanded and Global X

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

Diversification Opportunities for IShares Expanded and Global X

0.42

Correlation Coefficient

IShares Expanded  Global X

Very weak diversification

The 3 months correlation between IShares and Global is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding iShares Expanded Tech and Global X Cybersecurity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Cybersecurity and IShares Expanded 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 Expanded Tech 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 Cybersecurity has no effect on the direction of IShares Expanded i.e., IShares Expanded and Global X go up and down completely randomly.

Pair Corralation between IShares Expanded and Global X

Considering the 90-day investment horizon iShares Expanded Tech is expected to under-perform the Global X. In addition to that, IShares Expanded is 1.1 times more volatile than Global X Cybersecurity. It trades about -0.1 of its total potential returns per unit of risk. Global X Cybersecurity is currently generating about 0.04 per unit of volatility. If you would invest  3,246  in Global X Cybersecurity on December 27, 2024 and sell it today you would earn a total of  104.00  from holding Global X Cybersecurity or generate 3.2% return on investment over 90 days.

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

iShares Expanded Tech  vs.  Global X Cybersecurity

iShares Expanded Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Expanded Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Global X Cybersecurity

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Cybersecurity are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Global X is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares Expanded and Global X

The main advantage of trading using opposite IShares Expanded and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Expanded 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 Expanded Tech and Global X Cybersecurity 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.