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 Uranium and iShares MSCI Kuwait, 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

-0.47

Correlation Coefficient

Global X  IShares MSCI

Very good diversification

The 3 months correlation between Global and IShares is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Global X Uranium and iShares MSCI Kuwait in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Kuwait 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 Uranium 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 Kuwait 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

Considering the 90-day investment horizon Global X Uranium is expected to under-perform the IShares MSCI. In addition to that, Global X is 3.01 times more volatile than iShares MSCI Kuwait. It trades about -0.07 of its total potential returns per unit of risk. iShares MSCI Kuwait is currently generating about 0.18 per unit of volatility. If you would invest  3,226  in iShares MSCI Kuwait on December 27, 2024 and sell it today you would earn a total of  329.40  from holding iShares MSCI Kuwait or generate 10.21% return on investment over 90 days.

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

Global X Uranium  vs.  iShares MSCI Kuwait

Global X Uranium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Uranium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

iShares MSCI Kuwait

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Kuwait are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in April 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 Uranium and iShares MSCI Kuwait 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.