Correlation Between Global X and IShares

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

By analyzing existing cross correlation between Global X Robotics and IShares, you can compare the effects of market volatilities on Global X and IShares 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares.

Diversification Opportunities for Global X and IShares

-0.43

Correlation Coefficient

Global X  IShares

Very good diversification

The 3 months correlation between Global and IShares is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Global X Robotics and IShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares 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 Robotics are associated (or correlated) with IShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares has no effect on the direction of Global X i.e., Global X and IShares go up and down completely randomly.

Pair Corralation between Global X and IShares

Given the investment horizon of 90 days Global X Robotics is expected to generate 1.11 times more return on investment than IShares. However, Global X is 1.11 times more volatile than IShares. It trades about 0.07 of its potential returns per unit of risk. IShares is currently generating about -0.01 per unit of risk. If you would invest  2,619  in Global X Robotics on September 14, 2024 and sell it today you would earn a total of  685.50  from holding Global X Robotics or generate 26.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	67.66%
Values	Daily Returns

Global X Robotics  vs.  IShares

Global X Robotics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Robotics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

IShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, IShares is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global X and IShares

The main advantage of trading using opposite Global X and IShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares 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 will offset losses from the drop in IShares' long position.

The idea behind Global X Robotics and IShares 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.