Correlation Between Dow Jones and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and iShares ESG Advanced, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and IShares ESG.
Diversification Opportunities for Dow Jones and IShares ESG
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and IShares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and iShares ESG Advanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Advanced and Dow Jones 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 Dow Jones Industrial 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 Advanced has no effect on the direction of Dow Jones i.e., Dow Jones and IShares ESG go up and down completely randomly.
Pair Corralation between Dow Jones and IShares ESG
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 3.03 times more return on investment than IShares ESG. However, Dow Jones is 3.03 times more volatile than iShares ESG Advanced. It trades about 0.16 of its potential returns per unit of risk. iShares ESG Advanced is currently generating about 0.19 per unit of risk. If you would invest 3,880,733 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 610,332 from holding Dow Jones Industrial or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. iShares ESG Advanced
Performance |
| Timeline |
Dow Jones and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
iShares ESG Advanced
Pair trading matchups for IShares ESG
Pair Trading with Dow Jones and IShares ESG
The main advantage of trading using opposite Dow Jones and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| IShares ESG vs. iShares iBoxx Investment | IShares ESG vs. SPDR Bloomberg High | IShares ESG vs. iShares TIPS Bond | IShares ESG vs. iShares 20 Year |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |