Correlation Between Global X and IShares Residential

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

Diversification Opportunities for Global X and IShares Residential

0.74

Correlation Coefficient

Global X  IShares Residential

Poor diversification

The 3 months correlation between Global and IShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Global X SuperDividend and iShares Residential and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Residential and 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 Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Residential and has no effect on the direction of Global X i.e., Global X and IShares Residential go up and down completely randomly.

Pair Corralation between Global X and IShares Residential

Given the investment horizon of 90 days Global X is expected to generate 22.09 times less return on investment than IShares Residential. But when comparing it to its historical volatility, Global X SuperDividend is 1.8 times less risky than IShares Residential. It trades about 0.02 of its potential returns per unit of risk. iShares Residential and is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  8,214  in iShares Residential and on December 5, 2024 and sell it today you would earn a total of  490.00  from holding iShares Residential and or generate 5.97% return on investment over 90 days.

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

Global X SuperDividend  vs.  iShares Residential and

Global X SuperDividend

Risk-Adjusted Performance

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 fairly stable forward indicators, Global X is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iShares Residential and

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Residential and are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, IShares Residential is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global X and IShares Residential

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

The idea behind Global X SuperDividend and iShares Residential and 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 Anywhere module to track or share privately all of your investments from the convenience of any device.