Correlation Between IShares IBoxx and Global X

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

Diversification Opportunities for IShares IBoxx and Global X

0.71

Correlation Coefficient

IShares IBoxx  Global X

Poor diversification

The 3 months correlation between IShares and Global is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding iShares iBoxx Investment and Global X SuperIncome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SuperIncome and IShares IBoxx 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 iBoxx Investment 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 SuperIncome has no effect on the direction of IShares IBoxx i.e., IShares IBoxx and Global X go up and down completely randomly.

Pair Corralation between IShares IBoxx and Global X

Considering the 90-day investment horizon IShares IBoxx is expected to generate 1.03 times less return on investment than Global X. But when comparing it to its historical volatility, iShares iBoxx Investment is 1.42 times less risky than Global X. It trades about 0.02 of its potential returns per unit of risk. Global X SuperIncome is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  884.00  in Global X SuperIncome on October 4, 2024 and sell it today you would earn a total of  42.00  from holding Global X SuperIncome or generate 4.75% return on investment over 90 days.

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

iShares iBoxx Investment  vs.  Global X SuperIncome

iShares iBoxx Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares iBoxx Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IShares IBoxx is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Global X SuperIncome

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares IBoxx and Global X

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