Correlation Between Global X and IShares Russell

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

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

Diversification Opportunities for Global X and IShares Russell

0.31

Correlation Coefficient

Global X  IShares Russell

Weak diversification

The 3 months correlation between Global and IShares is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Global X SuperDividend and iShares Russell Top in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell Top 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 SuperDividend are associated (or correlated) with IShares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell Top has no effect on the direction of Global X i.e., Global X and IShares Russell go up and down completely randomly.

Pair Corralation between Global X and IShares Russell

Given the investment horizon of 90 days Global X SuperDividend is expected to generate 1.25 times more return on investment than IShares Russell. However, Global X is 1.25 times more volatile than iShares Russell Top. It trades about -0.14 of its potential returns per unit of risk. iShares Russell Top is currently generating about -0.4 per unit of risk. If you would invest  2,124  in Global X SuperDividend on October 5, 2024 and sell it today you would lose (52.00) from holding Global X SuperDividend or give up 2.45% of portfolio value over 90 days.

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

Global X SuperDividend  vs.  iShares Russell Top

Global X SuperDividend

Risk-Adjusted Performance

0 of 100

Very Weak

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

iShares Russell Top

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Russell Top has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, IShares Russell is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global X and IShares Russell

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

The idea behind Global X SuperDividend and iShares Russell Top 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.