Correlation Between IShares Core and Global X

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

Diversification Opportunities for IShares Core and Global X

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between IShares and Global is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Conservative and Global X Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Conservative and IShares Core 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 Core Conservative 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 Conservative has no effect on the direction of IShares Core i.e., IShares Core and Global X go up and down completely randomly.

Pair Corralation between IShares Core and Global X

Assuming the 90 days trading horizon iShares Core Conservative is expected to generate 0.98 times more return on investment than Global X. However, iShares Core Conservative is 1.02 times less risky than Global X. It trades about -0.26 of its potential returns per unit of risk. Global X Conservative is currently generating about -0.31 per unit of risk. If you would invest  2,388  in iShares Core Conservative on October 10, 2024 and sell it today you would lose (40.00) from holding iShares Core Conservative or give up 1.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

iShares Core Conservative  vs.  Global X Conservative

 Performance 
       Timeline  
iShares Core Conservative 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core Conservative are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
Global X Conservative 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Global X Conservative are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

IShares Core and Global X Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares Core and Global X

The main advantage of trading using opposite IShares Core and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 Core Conservative and Global X Conservative 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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