Correlation Between IShares ESG and VanEck LongFlat
Can any of the company-specific risk be diversified away by investing in both IShares ESG and VanEck LongFlat 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 VanEck LongFlat 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 VanEck LongFlat Trend, you can compare the effects of market volatilities on IShares ESG and VanEck LongFlat 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 VanEck LongFlat. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and VanEck LongFlat.
Diversification Opportunities for IShares ESG and VanEck LongFlat
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and VanEck is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and VanEck LongFlat Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck LongFlat Trend 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 VanEck LongFlat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck LongFlat Trend has no effect on the direction of IShares ESG i.e., IShares ESG and VanEck LongFlat go up and down completely randomly.
Pair Corralation between IShares ESG and VanEck LongFlat
Given the investment horizon of 90 days iShares ESG Aware is expected to generate 1.02 times more return on investment than VanEck LongFlat. However, IShares ESG is 1.02 times more volatile than VanEck LongFlat Trend. It trades about 0.4 of its potential returns per unit of risk. VanEck LongFlat Trend is currently generating about 0.37 per unit of risk. If you would invest 12,461 in iShares ESG Aware on September 1, 2024 and sell it today you would earn a total of 811.00 from holding iShares ESG Aware or generate 6.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares ESG Aware vs. VanEck LongFlat Trend
Performance |
| Timeline |
| iShares ESG Aware |
| VanEck LongFlat Trend |
IShares ESG and VanEck LongFlat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and VanEck LongFlat
The main advantage of trading using opposite IShares ESG and VanEck LongFlat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, VanEck LongFlat 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 VanEck LongFlat will offset losses from the drop in VanEck LongFlat's long position.| IShares ESG vs. Vanguard Total Stock | IShares ESG vs. SPDR SP 500 | IShares ESG vs. iShares Core SP | IShares ESG vs. Vanguard Dividend Appreciation |
| VanEck LongFlat vs. VanEck Morningstar International | VanEck LongFlat vs. PIMCO RAFI Dynamic | VanEck LongFlat vs. PIMCO RAFI Dynamic | VanEck LongFlat vs. John Hancock Multifactor |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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