Correlation Between IShares ESG and Dow Jones
Can any of the company-specific risk be diversified away by investing in both IShares ESG and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on IShares ESG and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Dow Jones.
Diversification Opportunities for IShares ESG and Dow Jones
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Dow is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of IShares ESG i.e., IShares ESG and Dow Jones go up and down completely randomly.
Pair Corralation between IShares ESG and Dow Jones
Given the investment horizon of 90 days iShares ESG Aware is expected to generate 1.15 times more return on investment than Dow Jones. However, IShares ESG is 1.15 times more volatile than Dow Jones Industrial. It trades about 0.12 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 9,583 in iShares ESG Aware on August 28, 2024 and sell it today you would earn a total of 3,592 from holding iShares ESG Aware or generate 37.48% 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. Dow Jones Industrial
Performance |
| Timeline |
IShares ESG and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
iShares ESG Aware
Pair trading matchups for IShares ESG
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with IShares ESG and Dow Jones
The main advantage of trading using opposite IShares ESG and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| IShares ESG vs. Morningstar Unconstrained Allocation | IShares ESG vs. High Yield Municipal Fund | IShares ESG vs. Via Renewables | IShares ESG vs. Knife River |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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