Correlation Between IShares ESG and SPDR MSCI
Can any of the company-specific risk be diversified away by investing in both IShares ESG and SPDR 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 SPDR 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 SPDR MSCI USA, you can compare the effects of market volatilities on IShares ESG and SPDR 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 SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and SPDR MSCI.
Diversification Opportunities for IShares ESG and SPDR MSCI
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and SPDR is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and SPDR MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI USA 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 SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI USA has no effect on the direction of IShares ESG i.e., IShares ESG and SPDR MSCI go up and down completely randomly.
Pair Corralation between IShares ESG and SPDR MSCI
Given the investment horizon of 90 days iShares ESG Aware is expected to generate 1.23 times more return on investment than SPDR MSCI. However, IShares ESG is 1.23 times more volatile than SPDR MSCI USA. It trades about 0.13 of its potential returns per unit of risk. SPDR MSCI USA is currently generating about 0.14 per unit of risk. If you would invest 8,901 in iShares ESG Aware on August 27, 2024 and sell it today you would earn a total of 4,222 from holding iShares ESG Aware or generate 47.43% 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. SPDR MSCI USA
Performance |
| Timeline |
| iShares ESG Aware |
| SPDR MSCI USA |
IShares ESG and SPDR MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and SPDR MSCI
The main advantage of trading using opposite IShares ESG and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, SPDR 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 SPDR MSCI will offset losses from the drop in SPDR MSCI's 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 |
| SPDR MSCI vs. SPDR SSGA Large | SPDR MSCI vs. SPDR MSCI EAFE | SPDR MSCI vs. SPDR MSCI Emerging | SPDR MSCI vs. SPDR Russell 1000 |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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