Correlation Between IREIT MarketVector and Global X

Can any of the company-specific risk be diversified away by investing in both IREIT MarketVector 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 IREIT MarketVector and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iREIT MarketVector and Global X Funds, you can compare the effects of market volatilities on IREIT MarketVector 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 IREIT MarketVector with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IREIT MarketVector and Global X.

Diversification Opportunities for IREIT MarketVector and Global X

0.29

Correlation Coefficient

IREIT MarketVector  Global X

Modest diversification

The 3 months correlation between IREIT and Global is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding iREIT MarketVector 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 IREIT MarketVector 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 iREIT MarketVector 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 IREIT MarketVector i.e., IREIT MarketVector and Global X go up and down completely randomly.

Pair Corralation between IREIT MarketVector and Global X

Given the investment horizon of 90 days IREIT MarketVector is expected to generate 5.87 times less return on investment than Global X. But when comparing it to its historical volatility, iREIT MarketVector is 1.01 times less risky than Global X. It trades about 0.03 of its potential returns per unit of risk. Global X Funds is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,454  in Global X Funds on December 2, 2024 and sell it today you would earn a total of  1,771  from holding Global X Funds or generate 72.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	75.0%
Values	Daily Returns

iREIT MarketVector  vs.  Global X Funds

iREIT MarketVector

Risk-Adjusted Performance

Very Weak

Over the last 90 days iREIT MarketVector has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, IREIT MarketVector is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 rather fragile essential indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IREIT MarketVector and Global X

The main advantage of trading using opposite IREIT MarketVector and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IREIT MarketVector 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 iREIT MarketVector 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.