Correlation Between Global X and IShares MSCI

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

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

Diversification Opportunities for Global X and IShares MSCI

0.97

Correlation Coefficient

Global X  IShares MSCI

Almost no diversification

The 3 months correlation between Global and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Global X Millennials and iShares MSCI KLD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI KLD and Global X 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 Global X Millennials are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI KLD has no effect on the direction of Global X i.e., Global X and IShares MSCI go up and down completely randomly.

Pair Corralation between Global X and IShares MSCI

Given the investment horizon of 90 days Global X Millennials is expected to generate 0.99 times more return on investment than IShares MSCI. However, Global X Millennials is 1.02 times less risky than IShares MSCI. It trades about 0.36 of its potential returns per unit of risk. iShares MSCI KLD is currently generating about 0.17 per unit of risk. If you would invest  4,032  in Global X Millennials on September 14, 2024 and sell it today you would earn a total of  710.00  from holding Global X Millennials or generate 17.61% return on investment over 90 days.

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

Global X Millennials  vs.  iShares MSCI KLD

Global X Millennials

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Millennials are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, Global X displayed solid returns over the last few months and may actually be approaching a breakup point.

iShares MSCI KLD

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI KLD are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and IShares MSCI

The main advantage of trading using opposite Global X and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.

The idea behind Global X Millennials and iShares MSCI KLD 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.