Correlation Between IPath Series and Global X

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

By analyzing existing cross correlation between iPath Series B and Global X Russell, you can compare the effects of market volatilities on IPath Series 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 IPath Series with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPath Series and Global X.

Diversification Opportunities for IPath Series and Global X

-0.85

Correlation Coefficient

IPath Series  Global X

Pay attention - limited upside

The 3 months correlation between IPath and Global is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding iPath Series B and Global X Russell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Russell and IPath Series 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 iPath Series B 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 Russell has no effect on the direction of IPath Series i.e., IPath Series and Global X go up and down completely randomly.

Pair Corralation between IPath Series and Global X

Considering the 90-day investment horizon iPath Series B is expected to under-perform the Global X. In addition to that, IPath Series is 4.43 times more volatile than Global X Russell. It trades about -0.05 of its total potential returns per unit of risk. Global X Russell is currently generating about 0.04 per unit of volatility. If you would invest  1,945  in Global X Russell on October 10, 2024 and sell it today you would earn a total of  331.00  from holding Global X Russell or generate 17.02% return on investment over 90 days.

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

iPath Series B  vs.  Global X Russell

iPath Series B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iPath Series B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Global X Russell

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Russell are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Global X is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IPath Series and Global X

The main advantage of trading using opposite IPath Series and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPath Series 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 iPath Series B and Global X Russell 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.