Correlation Between IShares Latin and Global X

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

Diversification Opportunities for IShares Latin and Global X

0.91

Correlation Coefficient

IShares Latin  Global X

Almost no diversification

The 3 months correlation between IShares and Global is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Latin America 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 Latin 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 Latin America 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 Latin i.e., IShares Latin and Global X go up and down completely randomly.

Pair Corralation between IShares Latin and Global X

Considering the 90-day investment horizon iShares Latin America is expected to generate 0.84 times more return on investment than Global X. However, iShares Latin America is 1.19 times less risky than Global X. It trades about 0.17 of its potential returns per unit of risk. Global X Funds is currently generating about 0.12 per unit of risk. If you would invest  2,096  in iShares Latin America on December 28, 2024 and sell it today you would earn a total of  281.00  from holding iShares Latin America or generate 13.41% return on investment over 90 days.

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

iShares Latin America  vs.  Global X Funds

iShares Latin America

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Latin America are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal essential indicators, IShares Latin reported solid returns over the last few months and may actually be approaching a breakup point.

Global X Funds

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IShares Latin and Global X

The main advantage of trading using opposite IShares Latin and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Latin 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 Latin America 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .