Correlation Between IShares ESG and IShares Currency
Can any of the company-specific risk be diversified away by investing in both IShares ESG and IShares Currency 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 IShares Currency 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 iShares Currency Hedged, you can compare the effects of market volatilities on IShares ESG and IShares Currency 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 IShares Currency. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and IShares Currency.
Diversification Opportunities for IShares ESG and IShares Currency
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aggregate and iShares Currency Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Currency Hedged 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 IShares Currency. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Currency Hedged has no effect on the direction of IShares ESG i.e., IShares ESG and IShares Currency go up and down completely randomly.
Pair Corralation between IShares ESG and IShares Currency
Given the investment horizon of 90 days iShares ESG Aggregate is expected to under-perform the IShares Currency. But the etf apears to be less risky and, when comparing its historical volatility, iShares ESG Aggregate is 1.79 times less risky than IShares Currency. The etf trades about -0.08 of its potential returns per unit of risk. The iShares Currency Hedged is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 3,310 in iShares Currency Hedged on September 3, 2024 and sell it today you would lose (31.00) from holding iShares Currency Hedged or give up 0.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG Aggregate vs. iShares Currency Hedged
Performance |
| Timeline |
| iShares ESG Aggregate |
| iShares Currency Hedged |
IShares ESG and IShares Currency Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and IShares Currency
The main advantage of trading using opposite IShares ESG and IShares Currency positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, IShares Currency 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 Currency will offset losses from the drop in IShares Currency'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 |
| IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares Currency Hedged | IShares Currency vs. iShares MSCI Intl | IShares Currency vs. iShares Currency Hedged |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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