Correlation Between IShares ESG and IShares Emerging
Can any of the company-specific risk be diversified away by investing in both IShares ESG and IShares Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on IShares ESG and IShares Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and IShares Emerging.
Diversification Opportunities for IShares ESG and IShares Emerging
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and iShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Emerging Markets has no effect on the direction of IShares ESG i.e., IShares ESG and IShares Emerging go up and down completely randomly.
Pair Corralation between IShares ESG and IShares Emerging
Given the investment horizon of 90 days iShares ESG Aware is expected to generate 1.01 times more return on investment than IShares Emerging. However, IShares ESG is 1.01 times more volatile than iShares Emerging Markets. It trades about 0.04 of its potential returns per unit of risk. iShares Emerging Markets is currently generating about 0.0 per unit of risk. If you would invest 3,287 in iShares ESG Aware on September 1, 2024 and sell it today you would earn a total of 167.00 from holding iShares ESG Aware or generate 5.08% 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. iShares Emerging Markets
Performance |
| Timeline |
| iShares ESG Aware |
| iShares Emerging Markets |
IShares ESG and IShares Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and IShares Emerging
The main advantage of trading using opposite IShares ESG and IShares Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, IShares Emerging 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 Emerging will offset losses from the drop in IShares Emerging'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 USD |
| IShares Emerging vs. Franklin Templeton ETF | IShares Emerging vs. Altrius Global Dividend | IShares Emerging vs. Invesco Exchange Traded | IShares Emerging vs. Franklin International Core |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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