Correlation Between IShares ESG and VanEck Inflation
Can any of the company-specific risk be diversified away by investing in both IShares ESG and VanEck Inflation 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 VanEck Inflation 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 VanEck Inflation Allocation, you can compare the effects of market volatilities on IShares ESG and VanEck Inflation 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 VanEck Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and VanEck Inflation.
Diversification Opportunities for IShares ESG and VanEck Inflation
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and VanEck is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and VanEck Inflation Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Inflation All 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 VanEck Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Inflation All has no effect on the direction of IShares ESG i.e., IShares ESG and VanEck Inflation go up and down completely randomly.
Pair Corralation between IShares ESG and VanEck Inflation
Given the investment horizon of 90 days IShares ESG is expected to generate 1.41 times less return on investment than VanEck Inflation. But when comparing it to its historical volatility, iShares ESG Aware is 1.39 times less risky than VanEck Inflation. It trades about 0.12 of its potential returns per unit of risk. VanEck Inflation Allocation is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,712 in VanEck Inflation Allocation on September 1, 2024 and sell it today you would earn a total of 309.00 from holding VanEck Inflation Allocation or generate 11.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
iShares ESG Aware vs. VanEck Inflation Allocation
Performance |
| Timeline |
| iShares ESG Aware |
| VanEck Inflation All |
IShares ESG and VanEck Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and VanEck Inflation
The main advantage of trading using opposite IShares ESG and VanEck Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, VanEck Inflation 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 VanEck Inflation will offset losses from the drop in VanEck Inflation'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 |
| VanEck Inflation vs. iShares Core Growth | VanEck Inflation vs. ClearShares OCIO ETF | VanEck Inflation vs. Collaborative Investment Series | VanEck Inflation vs. Northern Lights |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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