Correlation Between IShares ESG and IShares Interest
Can any of the company-specific risk be diversified away by investing in both IShares ESG and IShares Interest 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 Interest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG Aware and iShares Interest Rate, you can compare the effects of market volatilities on IShares ESG and IShares Interest 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 Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and IShares Interest.
Diversification Opportunities for IShares ESG and IShares Interest
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and iShares Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Interest Rate 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 Aware are associated (or correlated) with IShares Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Interest Rate has no effect on the direction of IShares ESG i.e., IShares ESG and IShares Interest go up and down completely randomly.
Pair Corralation between IShares ESG and IShares Interest
Given the investment horizon of 90 days iShares ESG Aware is expected to generate 2.21 times more return on investment than IShares Interest. However, IShares ESG is 2.21 times more volatile than iShares Interest Rate. It trades about 0.09 of its potential returns per unit of risk. iShares Interest Rate is currently generating about 0.12 per unit of risk. If you would invest 2,728 in iShares ESG Aware on August 30, 2024 and sell it today you would earn a total of 946.00 from holding iShares ESG Aware or generate 34.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG Aware vs. iShares Interest Rate
Performance |
| Timeline |
| iShares ESG Aware |
| iShares Interest Rate |
IShares ESG and IShares Interest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and IShares Interest
The main advantage of trading using opposite IShares ESG and IShares Interest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, IShares Interest 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 Interest will offset losses from the drop in IShares Interest's long position.| IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Advanced |
| IShares Interest vs. iShares Interest Rate | IShares Interest vs. iShares Interest Rate | IShares Interest vs. iShares Edge Investment | IShares Interest vs. iShares Inflation 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |