Correlation Between IShares ESG and ProShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares ESG and ProShares MSCI 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 ProShares MSCI 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 ProShares MSCI Emerging, you can compare the effects of market volatilities on IShares ESG and ProShares MSCI 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 ProShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and ProShares MSCI.
Diversification Opportunities for IShares ESG and ProShares MSCI
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and ProShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and ProShares MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares MSCI Emerging 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 ProShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares MSCI Emerging has no effect on the direction of IShares ESG i.e., IShares ESG and ProShares MSCI go up and down completely randomly.
Pair Corralation between IShares ESG and ProShares MSCI
Given the investment horizon of 90 days IShares ESG is expected to generate 2.38 times less return on investment than ProShares MSCI. But when comparing it to its historical volatility, iShares ESG Aware is 1.41 times less risky than ProShares MSCI. It trades about 0.02 of its potential returns per unit of risk. ProShares MSCI Emerging is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,300 in ProShares MSCI Emerging on August 28, 2024 and sell it today you would earn a total of 107.00 from holding ProShares MSCI Emerging or generate 2.49% 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. ProShares MSCI Emerging
Performance |
| Timeline |
| iShares ESG Aware |
| ProShares MSCI Emerging |
IShares ESG and ProShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and ProShares MSCI
The main advantage of trading using opposite IShares ESG and ProShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, ProShares MSCI 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 ProShares MSCI will offset losses from the drop in ProShares MSCI's long position.| IShares ESG vs. Invesco PureBeta MSCI | IShares ESG vs. Aquagold International | IShares ESG vs. Morningstar Unconstrained Allocation | IShares ESG vs. High Yield Municipal Fund |
| ProShares MSCI vs. Invesco PureBeta MSCI | ProShares MSCI vs. Aquagold International | ProShares MSCI vs. Morningstar Unconstrained Allocation | ProShares MSCI vs. High Yield Municipal Fund |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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