Correlation Between IShares ESG and Innovator Capital
Can any of the company-specific risk be diversified away by investing in both IShares ESG and Innovator Capital 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 Innovator Capital 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 Innovator Capital Management, you can compare the effects of market volatilities on IShares ESG and Innovator Capital 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 Innovator Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Innovator Capital.
Diversification Opportunities for IShares ESG and Innovator Capital
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Innovator is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and Innovator Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Capital 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 Innovator Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Capital has no effect on the direction of IShares ESG i.e., IShares ESG and Innovator Capital go up and down completely randomly.
Pair Corralation between IShares ESG and Innovator Capital
Given the investment horizon of 90 days iShares ESG Aware is expected to generate 1.93 times more return on investment than Innovator Capital. However, IShares ESG is 1.93 times more volatile than Innovator Capital Management. It trades about 0.11 of its potential returns per unit of risk. Innovator Capital Management is currently generating about 0.16 per unit of risk. If you would invest 8,672 in iShares ESG Aware on September 3, 2024 and sell it today you would earn a total of 4,600 from holding iShares ESG Aware or generate 53.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 30.71% |
| Values | Daily Returns |
iShares ESG Aware vs. Innovator Capital Management
Performance |
| Timeline |
| iShares ESG Aware |
| Innovator Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IShares ESG and Innovator Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and Innovator Capital
The main advantage of trading using opposite IShares ESG and Innovator Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, Innovator Capital 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 Innovator Capital will offset losses from the drop in Innovator Capital'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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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