Correlation Between IShares ESG and ETF Series
Can any of the company-specific risk be diversified away by investing in both IShares ESG and ETF Series 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 ETF Series 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 ETF Series Solutions, you can compare the effects of market volatilities on IShares ESG and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and ETF Series.
Diversification Opportunities for IShares ESG and ETF Series
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and ETF is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aggregate and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of IShares ESG i.e., IShares ESG and ETF Series go up and down completely randomly.
Pair Corralation between IShares ESG and ETF Series
Given the investment horizon of 90 days iShares ESG Aggregate is expected to generate 0.42 times more return on investment than ETF Series. However, iShares ESG Aggregate is 2.4 times less risky than ETF Series. It trades about 0.29 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.05 per unit of risk. If you would invest 4,663 in iShares ESG Aggregate on December 1, 2024 and sell it today you would earn a total of 95.00 from holding iShares ESG Aggregate or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG Aggregate vs. ETF Series Solutions
Performance |
| Timeline |
| iShares ESG Aggregate |
| ETF Series Solutions |
IShares ESG and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and ETF Series
The main advantage of trading using opposite IShares ESG and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.| IShares ESG vs. iShares ESG 1 5 | IShares ESG vs. iShares ESG USD | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware |
| ETF Series vs. Distillate Fundamental Stability | ETF Series vs. ETF Series Solutions | ETF Series vs. WisdomTree International Multifactor |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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