Correlation Between Global X and IShares Emerging

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

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

Diversification Opportunities for Global X and IShares Emerging

0.31

Correlation Coefficient

Global X  IShares Emerging

Weak diversification

The 3 months correlation between Global and IShares is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Global X SuperIncome and iShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Emerging Markets 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 SuperIncome are associated (or correlated) with IShares Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Emerging Markets has no effect on the direction of Global X i.e., Global X and IShares Emerging go up and down completely randomly.

Pair Corralation between Global X and IShares Emerging

Given the investment horizon of 90 days Global X is expected to generate 1.36 times less return on investment than IShares Emerging. But when comparing it to its historical volatility, Global X SuperIncome is 1.9 times less risky than IShares Emerging. It trades about 0.09 of its potential returns per unit of risk. iShares Emerging Markets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,445  in iShares Emerging Markets on September 14, 2024 and sell it today you would earn a total of  362.00  from holding iShares Emerging Markets or generate 14.81% return on investment over 90 days.

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

Global X SuperIncome  vs.  iShares Emerging Markets

Global X SuperIncome

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global X SuperIncome are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Global X is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

iShares Emerging Markets

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Emerging Markets are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IShares Emerging is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global X and IShares Emerging

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

The idea behind Global X SuperIncome and iShares Emerging Markets 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.