Correlation Between IShares ESG and IndexIQ
Can any of the company-specific risk be diversified away by investing in both IShares ESG and IndexIQ 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 IndexIQ 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 IndexIQ, you can compare the effects of market volatilities on IShares ESG and IndexIQ 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 IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and IndexIQ.
Diversification Opportunities for IShares ESG and IndexIQ
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and IndexIQ is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ 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 IndexIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ has no effect on the direction of IShares ESG i.e., IShares ESG and IndexIQ go up and down completely randomly.
Pair Corralation between IShares ESG and IndexIQ
If you would invest 12,086 in iShares ESG Aware on September 2, 2024 and sell it today you would earn a total of 1,186 from holding iShares ESG Aware or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 1.56% |
| Values | Daily Returns |
iShares ESG Aware vs. IndexIQ
Performance |
| Timeline |
| iShares ESG Aware |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares ESG and IndexIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and IndexIQ
The main advantage of trading using opposite IShares ESG and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, IndexIQ 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 IndexIQ will offset losses from the drop in IndexIQ's long position.| IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. Vanguard ESG Stock | IShares ESG vs. iShares MSCI USA |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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