Correlation Between IShares Russell and Global X

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

Diversification Opportunities for IShares Russell and Global X

0.93

Correlation Coefficient

IShares Russell  Global X

Almost no diversification

The 3 months correlation between IShares and Global is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell Mid Cap 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 Russell 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 Russell Mid Cap 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 Russell i.e., IShares Russell and Global X go up and down completely randomly.

Pair Corralation between IShares Russell and Global X

Considering the 90-day investment horizon iShares Russell Mid Cap is expected to under-perform the Global X. But the etf apears to be less risky and, when comparing its historical volatility, iShares Russell Mid Cap is 1.04 times less risky than Global X. The etf trades about -0.05 of its potential returns per unit of risk. The Global X Funds is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,121  in Global X Funds on December 28, 2024 and sell it today you would lose (49.00) from holding Global X Funds or give up 1.57% of portfolio value over 90 days.

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

iShares Russell Mid Cap  vs.  Global X Funds

iShares Russell Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Russell Mid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Russell is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Global X Funds

Risk-Adjusted Performance

Very Weak

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

Pair Trading with IShares Russell and Global X

The main advantage of trading using opposite IShares Russell and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell 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 Russell Mid Cap 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.