Correlation Between Volatility Shares and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Volatility Shares and IShares ESG 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 Volatility Shares and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volatility Shares Trust and iShares ESG MSCI, you can compare the effects of market volatilities on Volatility Shares and IShares ESG 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 Volatility Shares with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and IShares ESG.
Diversification Opportunities for Volatility Shares and IShares ESG
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Volatility and IShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and iShares ESG MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG MSCI and Volatility Shares 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 Volatility Shares Trust are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG MSCI has no effect on the direction of Volatility Shares i.e., Volatility Shares and IShares ESG go up and down completely randomly.
Pair Corralation between Volatility Shares and IShares ESG
Given the investment horizon of 90 days Volatility Shares Trust is expected to generate 10.65 times more return on investment than IShares ESG. However, Volatility Shares is 10.65 times more volatile than iShares ESG MSCI. It trades about 0.39 of its potential returns per unit of risk. iShares ESG MSCI is currently generating about 0.33 per unit of risk. If you would invest 3,194 in Volatility Shares Trust on September 2, 2024 and sell it today you would earn a total of 2,826 from holding Volatility Shares Trust or generate 88.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volatility Shares Trust vs. iShares ESG MSCI
Performance |
| Timeline |
| Volatility Shares Trust |
| iShares ESG MSCI |
Volatility Shares and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volatility Shares and IShares ESG
The main advantage of trading using opposite Volatility Shares and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares position performs unexpectedly, IShares ESG 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 ESG will offset losses from the drop in IShares ESG's long position.| Volatility Shares vs. ProShares Trust | Volatility Shares vs. iShares Ethereum Trust | Volatility Shares vs. ProShares Trust | Volatility Shares vs. Grayscale Ethereum Trust |
| IShares ESG vs. Xtrackers MSCI USA | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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