Correlation Between IShares ESG and Strategy Shares
Can any of the company-specific risk be diversified away by investing in both IShares ESG and Strategy Shares 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 Strategy Shares 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 Strategy Shares NewfoundReSolve, you can compare the effects of market volatilities on IShares ESG and Strategy Shares 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 Strategy Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Strategy Shares.
Diversification Opportunities for IShares ESG and Strategy Shares
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Strategy is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and Strategy Shares NewfoundReSolv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares Newf 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 Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares Newf has no effect on the direction of IShares ESG i.e., IShares ESG and Strategy Shares go up and down completely randomly.
Pair Corralation between IShares ESG and Strategy Shares
Given the investment horizon of 90 days IShares ESG is expected to generate 1.03 times less return on investment than Strategy Shares. But when comparing it to its historical volatility, iShares ESG Aware is 1.04 times less risky than Strategy Shares. It trades about 0.09 of its potential returns per unit of risk. Strategy Shares NewfoundReSolve is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,403 in Strategy Shares NewfoundReSolve on August 26, 2024 and sell it today you would earn a total of 822.00 from holding Strategy Shares NewfoundReSolve or generate 34.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG Aware vs. Strategy Shares NewfoundReSolv
Performance |
| Timeline |
| iShares ESG Aware |
| Strategy Shares Newf |
IShares ESG and Strategy Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and Strategy Shares
The main advantage of trading using opposite IShares ESG and Strategy Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, Strategy Shares 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 Strategy Shares will offset losses from the drop in Strategy Shares' 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 |
| Strategy Shares vs. Cambria Trinity ETF | Strategy Shares vs. Northern Lights | Strategy Shares vs. Cambria Global Momentum | Strategy Shares vs. Alpha Architect Value |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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