Correlation Between Global X and IShares Russell
Can any of the company-specific risk be diversified away by investing in both Global X and IShares Russell 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 Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Cloud and iShares Russell Mid Cap, you can compare the effects of market volatilities on Global X and IShares Russell 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 Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Russell.
Diversification Opportunities for Global X and IShares Russell
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Global X Cloud and iShares Russell Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Russell Mid 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 Cloud are associated (or correlated) with IShares Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Russell Mid has no effect on the direction of Global X i.e., Global X and IShares Russell go up and down completely randomly.
Pair Corralation between Global X and IShares Russell
Given the investment horizon of 90 days Global X Cloud is expected to generate 1.14 times more return on investment than IShares Russell. However, Global X is 1.14 times more volatile than iShares Russell Mid Cap. It trades about -0.02 of its potential returns per unit of risk. iShares Russell Mid Cap is currently generating about -0.13 per unit of risk. If you would invest 2,487 in Global X Cloud on September 25, 2024 and sell it today you would lose (24.00) from holding Global X Cloud or give up 0.97% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Global X Cloud vs. iShares Russell Mid Cap
Performance |
Timeline |
Global X Cloud |
iShares Russell Mid |
Global X and IShares Russell Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global X and IShares Russell
The main advantage of trading using opposite Global X and IShares Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Russell 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 Russell will offset losses from the drop in IShares Russell's long position.Global X vs. Technology Select Sector | Global X vs. Financial Select Sector | Global X vs. Consumer Discretionary Select | Global X vs. Industrial Select Sector |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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