Correlation Between IShares MSCI and Global X

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

Diversification Opportunities for IShares MSCI and Global X

0.95

Correlation Coefficient

IShares MSCI  Global X

Almost no diversification

The 3 months correlation between IShares and Global is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Hong and Global X MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MSCI and IShares MSCI 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 MSCI Hong 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 MSCI has no effect on the direction of IShares MSCI i.e., IShares MSCI and Global X go up and down completely randomly.

Pair Corralation between IShares MSCI and Global X

Considering the 90-day investment horizon iShares MSCI Hong is expected to generate 0.65 times more return on investment than Global X. However, iShares MSCI Hong is 1.53 times less risky than Global X. It trades about -0.08 of its potential returns per unit of risk. Global X MSCI is currently generating about -0.05 per unit of risk. If you would invest  1,869  in iShares MSCI Hong on October 1, 2024 and sell it today you would lose (193.00) from holding iShares MSCI Hong or give up 10.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

iShares MSCI Hong  vs.  Global X MSCI

iShares MSCI Hong

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Hong has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the Etf traders.

Global X MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Etf's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with IShares MSCI and Global X

The main advantage of trading using opposite IShares MSCI and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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 MSCI Hong and Global X MSCI 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.