Correlation Between IShares Emergent and Global X

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

Diversification Opportunities for IShares Emergent and Global X

0.7

Correlation Coefficient

IShares Emergent  Global X

Poor diversification

The 3 months correlation between IShares and Global is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding iShares Emergent Food and Global X SuperDividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SuperDividend and IShares Emergent 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 Emergent Food 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 SuperDividend has no effect on the direction of IShares Emergent i.e., IShares Emergent and Global X go up and down completely randomly.

Pair Corralation between IShares Emergent and Global X

Given the investment horizon of 90 days iShares Emergent Food is expected to under-perform the Global X. In addition to that, IShares Emergent is 1.03 times more volatile than Global X SuperDividend. It trades about -0.31 of its total potential returns per unit of risk. Global X SuperDividend is currently generating about -0.24 per unit of volatility. If you would invest  1,881  in Global X SuperDividend on October 6, 2024 and sell it today you would lose (67.00) from holding Global X SuperDividend or give up 3.56% of portfolio value over 90 days.

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

iShares Emergent Food  vs.  Global X SuperDividend

iShares Emergent Food

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global X SuperDividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X SuperDividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Global X is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares Emergent and Global X

The main advantage of trading using opposite IShares Emergent and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Emergent 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 Emergent Food and Global X SuperDividend 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.