Correlation Between IShares Cybersecurity and Global X

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

Diversification Opportunities for IShares Cybersecurity and Global X

0.84

Correlation Coefficient

IShares Cybersecurity  Global X

Very poor diversification

The 3 months correlation between IShares and Global is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding iShares Cybersecurity and and Global X Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Robotics and IShares Cybersecurity 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 Cybersecurity and 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 Robotics has no effect on the direction of IShares Cybersecurity i.e., IShares Cybersecurity and Global X go up and down completely randomly.

Pair Corralation between IShares Cybersecurity and Global X

Given the investment horizon of 90 days IShares Cybersecurity is expected to generate 1.18 times less return on investment than Global X. But when comparing it to its historical volatility, iShares Cybersecurity and is 1.14 times less risky than Global X. It trades about 0.07 of its potential returns per unit of risk. Global X Robotics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,173  in Global X Robotics on September 4, 2024 and sell it today you would earn a total of  1,185  from holding Global X Robotics or generate 54.53% return on investment over 90 days.

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

iShares Cybersecurity and  vs.  Global X Robotics

iShares Cybersecurity and

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Cybersecurity and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, IShares Cybersecurity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global X Robotics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Robotics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly 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 Cybersecurity and Global X

The main advantage of trading using opposite IShares Cybersecurity and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Cybersecurity 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 Cybersecurity and and Global X Robotics 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..