Correlation Between Global X and IShares Genomics

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

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

Diversification Opportunities for Global X and IShares Genomics

-0.17

Correlation Coefficient

Global X  IShares Genomics

Good diversification

The 3 months correlation between Global and IShares is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Global X E commerce and iShares Genomics Immunology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Genomics Imm 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 E commerce are associated (or correlated) with IShares Genomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Genomics Imm has no effect on the direction of Global X i.e., Global X and IShares Genomics go up and down completely randomly.

Pair Corralation between Global X and IShares Genomics

Given the investment horizon of 90 days Global X E commerce is expected to generate 1.0 times more return on investment than IShares Genomics. However, Global X is 1.0 times more volatile than iShares Genomics Immunology. It trades about 0.26 of its potential returns per unit of risk. iShares Genomics Immunology is currently generating about 0.02 per unit of risk. If you would invest  2,386  in Global X E commerce on September 3, 2024 and sell it today you would earn a total of  513.00  from holding Global X E commerce or generate 21.5% return on investment over 90 days.

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

Global X E commerce  vs.  iShares Genomics Immunology

Global X E

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X E commerce are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Global X showed solid returns over the last few months and may actually be approaching a breakup point.

iShares Genomics Imm

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Genomics Immunology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Genomics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global X and IShares Genomics

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

The idea behind Global X E commerce and iShares Genomics Immunology 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .