Correlation Between IShares Global and Knowledge Leaders

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

By analyzing existing cross correlation between iShares Global 100 and Knowledge Leaders Developed, you can compare the effects of market volatilities on IShares Global and Knowledge Leaders 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 Global with a short position of Knowledge Leaders. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and Knowledge Leaders.

Diversification Opportunities for IShares Global and Knowledge Leaders

0.75

Correlation Coefficient

IShares Global  Knowledge Leaders

Poor diversification

The 3 months correlation between IShares and Knowledge is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global 100 and Knowledge Leaders Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowledge Leaders and IShares Global 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 Global 100 are associated (or correlated) with Knowledge Leaders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowledge Leaders has no effect on the direction of IShares Global i.e., IShares Global and Knowledge Leaders go up and down completely randomly.

Pair Corralation between IShares Global and Knowledge Leaders

Considering the 90-day investment horizon iShares Global 100 is expected to generate 1.1 times more return on investment than Knowledge Leaders. However, IShares Global is 1.1 times more volatile than Knowledge Leaders Developed. It trades about 0.18 of its potential returns per unit of risk. Knowledge Leaders Developed is currently generating about 0.1 per unit of risk. If you would invest  11,063  in iShares Global 100 on July 22, 2025 and sell it today you would earn a total of  981.00  from holding iShares Global 100 or generate 8.87% return on investment over 90 days.

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

iShares Global 100  vs.  Knowledge Leaders Developed

iShares Global 100

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global 100 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very sluggish basic indicators, IShares Global may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Knowledge Leaders

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Knowledge Leaders Developed are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, Knowledge Leaders is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares Global and Knowledge Leaders

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

The idea behind iShares Global 100 and Knowledge Leaders Developed 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.