Correlation Between IShares Technology and Global X

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

Diversification Opportunities for IShares Technology and Global X

-0.81

Correlation Coefficient

IShares Technology  Global X

Pay attention - limited upside

The 3 months correlation between IShares and Global is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding iShares Technology ETF 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 Technology 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 Technology ETF 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 Technology i.e., IShares Technology and Global X go up and down completely randomly.

Pair Corralation between IShares Technology and Global X

Considering the 90-day investment horizon iShares Technology ETF is expected to under-perform the Global X. In addition to that, IShares Technology is 1.18 times more volatile than Global X Funds. It trades about -0.08 of its total potential returns per unit of risk. Global X Funds is currently generating about 0.28 per unit of volatility. If you would invest  3,747  in Global X Funds on December 28, 2024 and sell it today you would earn a total of  1,005  from holding Global X Funds or generate 26.82% return on investment over 90 days.

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

iShares Technology ETF  vs.  Global X Funds

iShares Technology ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Technology ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Global X Funds

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, Global X exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Technology and Global X

The main advantage of trading using opposite IShares Technology and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Technology 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 Technology ETF 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.