Correlation Between IShares Treasury and Global X

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

Diversification Opportunities for IShares Treasury and Global X

1.0

Correlation Coefficient

IShares Treasury  Global X

No risk reduction

The 3 months correlation between IShares and Global is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Treasury Floating and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and IShares Treasury 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 Treasury Floating 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 Funds has no effect on the direction of IShares Treasury i.e., IShares Treasury and Global X go up and down completely randomly.

Pair Corralation between IShares Treasury and Global X

Given the investment horizon of 90 days iShares Treasury Floating is expected to generate 0.99 times more return on investment than Global X. However, iShares Treasury Floating is 1.01 times less risky than Global X. It trades about 0.87 of its potential returns per unit of risk. Global X Funds is currently generating about 0.79 per unit of risk. If you would invest  5,012  in iShares Treasury Floating on December 29, 2024 and sell it today you would earn a total of  53.00  from holding iShares Treasury Floating or generate 1.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

iShares Treasury Floating  vs.  Global X Funds

iShares Treasury Floating

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Treasury Floating are ranked lower than 69 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, IShares Treasury is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Global X Funds

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 61 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Global X is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares Treasury and Global X

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

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.