Correlation Between IShares Exponential and Global X

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

Diversification Opportunities for IShares Exponential and Global X

0.52

Correlation Coefficient

IShares Exponential  Global X

Very weak diversification

The 3 months correlation between IShares and Global is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding iShares Exponential Technologi and Global X FinTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X FinTech and IShares Exponential 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 Exponential Technologies 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 FinTech has no effect on the direction of IShares Exponential i.e., IShares Exponential and Global X go up and down completely randomly.

Pair Corralation between IShares Exponential and Global X

Allowing for the 90-day total investment horizon IShares Exponential is expected to generate 36.51 times less return on investment than Global X. But when comparing it to its historical volatility, iShares Exponential Technologies is 1.63 times less risky than Global X. It trades about 0.01 of its potential returns per unit of risk. Global X FinTech is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,800  in Global X FinTech on October 10, 2024 and sell it today you would earn a total of  348.00  from holding Global X FinTech or generate 12.43% return on investment over 90 days.

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

iShares Exponential Technologi  vs.  Global X FinTech

iShares Exponential

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Exponential Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Exponential is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Global X FinTech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X FinTech are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Global X showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Exponential and Global X

The main advantage of trading using opposite IShares Exponential and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Exponential 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 Exponential Technologies and Global X FinTech 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.