Correlation Between IShares ESG and Capital Group
Can any of the company-specific risk be diversified away by investing in both IShares ESG and Capital Group 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 ESG and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG Aggregate and Capital Group International, you can compare the effects of market volatilities on IShares ESG and Capital Group 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 ESG with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Capital Group.
Diversification Opportunities for IShares ESG and Capital Group
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Capital is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aggregate and Capital Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Intern and IShares ESG 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 ESG Aggregate are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Intern has no effect on the direction of IShares ESG i.e., IShares ESG and Capital Group go up and down completely randomly.
Pair Corralation between IShares ESG and Capital Group
Given the investment horizon of 90 days IShares ESG is expected to generate 353.3 times less return on investment than Capital Group. But when comparing it to its historical volatility, iShares ESG Aggregate is 246.35 times less risky than Capital Group. It trades about 0.07 of its potential returns per unit of risk. Capital Group International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Capital Group International on September 3, 2024 and sell it today you would earn a total of 2,474 from holding Capital Group International or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 35.81% |
| Values | Daily Returns |
iShares ESG Aggregate vs. Capital Group International
Performance |
| Timeline |
| iShares ESG Aggregate |
| Capital Group Intern |
IShares ESG and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and Capital Group
The main advantage of trading using opposite IShares ESG and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| IShares ESG vs. ClearShares Ultra Short Maturity | IShares ESG vs. PGIM Active High | IShares ESG vs. Pacer Trendpilot Bond | IShares ESG vs. Pacer Lunt Large |
| Capital Group vs. iShares Core SP | Capital Group vs. iShares Core 1 5 | Capital Group vs. iShares Core MSCI | Capital Group vs. iShares Core MSCI |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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