Correlation Between IShares ESG and American Century
Can any of the company-specific risk be diversified away by investing in both IShares ESG and American Century 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 American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG Advanced and American Century STOXX, you can compare the effects of market volatilities on IShares ESG and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and American Century.
Diversification Opportunities for IShares ESG and American Century
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and American is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Advanced and American Century STOXX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century STOXX 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 Advanced are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century STOXX has no effect on the direction of IShares ESG i.e., IShares ESG and American Century go up and down completely randomly.
Pair Corralation between IShares ESG and American Century
Given the investment horizon of 90 days iShares ESG Advanced is expected to generate 0.66 times more return on investment than American Century. However, iShares ESG Advanced is 1.51 times less risky than American Century. It trades about 0.2 of its potential returns per unit of risk. American Century STOXX is currently generating about 0.04 per unit of risk. If you would invest 8,149 in iShares ESG Advanced on September 13, 2024 and sell it today you would earn a total of 124.00 from holding iShares ESG Advanced or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares ESG Advanced vs. American Century STOXX
Performance |
| Timeline |
| iShares ESG Advanced |
| American Century STOXX |
IShares ESG and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and American Century
The main advantage of trading using opposite IShares ESG and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| IShares ESG vs. VanEck Vectors Moodys | IShares ESG vs. BondBloxx ETF Trust | IShares ESG vs. Vanguard ESG Corporate | IShares ESG vs. Vanguard Intermediate Term Corporate |
| American Century vs. American Century Quality | American Century vs. Invesco SP 500 | American Century vs. American Century Diversified | American Century vs. Invesco SP SmallCap |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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