Correlation Between Global X and IShares Global

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

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

Diversification Opportunities for Global X and IShares Global

0.17

Correlation Coefficient

Global X  IShares Global

Average diversification

The 3 months correlation between Global and IShares is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Global X Infrastructure and iShares Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Infra 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 Infrastructure are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Infra has no effect on the direction of Global X i.e., Global X and IShares Global go up and down completely randomly.

Pair Corralation between Global X and IShares Global

Given the investment horizon of 90 days Global X Infrastructure is expected to under-perform the IShares Global. In addition to that, Global X is 1.65 times more volatile than iShares Global Infrastructure. It trades about -0.06 of its total potential returns per unit of risk. iShares Global Infrastructure is currently generating about 0.08 per unit of volatility. If you would invest  5,233  in iShares Global Infrastructure on December 27, 2024 and sell it today you would earn a total of  206.00  from holding iShares Global Infrastructure or generate 3.94% return on investment over 90 days.

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

Global X Infrastructure  vs.  iShares Global Infrastructure

Global X Infrastructure

Risk-Adjusted Performance

Very Weak

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

iShares Global Infra

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Infrastructure are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, IShares Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global X and IShares Global

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

The idea behind Global X Infrastructure and iShares Global Infrastructure 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.