Correlation Between IShares Trust and IShares ESG
Can any of the company-specific risk be diversified away by investing in both IShares Trust and IShares ESG 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 Trust and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and iShares ESG Aware, you can compare the effects of market volatilities on IShares Trust and IShares ESG 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 Trust with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and IShares ESG.
Diversification Opportunities for IShares Trust and IShares ESG
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 Trust and iShares ESG Aware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aware and IShares Trust 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 Trust are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Aware has no effect on the direction of IShares Trust i.e., IShares Trust and IShares ESG go up and down completely randomly.
Pair Corralation between IShares Trust and IShares ESG
Given the investment horizon of 90 days iShares Trust is expected to generate 1.49 times more return on investment than IShares ESG. However, IShares Trust is 1.49 times more volatile than iShares ESG Aware. It trades about 0.12 of its potential returns per unit of risk. iShares ESG Aware is currently generating about 0.09 per unit of risk. If you would invest 4,243 in iShares Trust on August 23, 2024 and sell it today you would earn a total of 125.00 from holding iShares Trust or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. iShares ESG Aware
Performance |
| Timeline |
| iShares Trust |
| iShares ESG Aware |
IShares Trust and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and IShares ESG
The main advantage of trading using opposite IShares Trust and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, IShares ESG 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 ESG will offset losses from the drop in IShares ESG's long position.| IShares Trust vs. Vanguard Russell 1000 | IShares Trust vs. Vanguard Russell 2000 | IShares Trust vs. Vanguard Mega Cap | IShares Trust vs. Vanguard Russell 1000 |
| IShares ESG vs. Electric Car | IShares ESG vs. JNS Holdings Corp | IShares ESG vs. Plyzer Technologies | IShares ESG vs. Visium Technologies |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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