Correlation Between IShares ESG and Xtrackers
Can any of the company-specific risk be diversified away by investing in both IShares ESG and Xtrackers 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 Xtrackers 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 Xtrackers SP 500, you can compare the effects of market volatilities on IShares ESG and Xtrackers 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 Xtrackers. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Xtrackers.
Diversification Opportunities for IShares ESG and Xtrackers
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Xtrackers is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and Xtrackers SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers SP 500 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 Xtrackers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers SP 500 has no effect on the direction of IShares ESG i.e., IShares ESG and Xtrackers go up and down completely randomly.
Pair Corralation between IShares ESG and Xtrackers
Given the investment horizon of 90 days iShares ESG Aware is expected to generate 1.0 times more return on investment than Xtrackers. However, IShares ESG is 1.0 times more volatile than Xtrackers SP 500. It trades about 0.14 of its potential returns per unit of risk. Xtrackers SP 500 is currently generating about 0.12 per unit of risk. If you would invest 12,339 in iShares ESG Aware on August 30, 2024 and sell it today you would earn a total of 845.00 from holding iShares ESG Aware or generate 6.85% 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. Xtrackers SP 500
Performance |
| Timeline |
| iShares ESG Aware |
| Xtrackers SP 500 |
IShares ESG and Xtrackers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and Xtrackers
The main advantage of trading using opposite IShares ESG and Xtrackers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, Xtrackers 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 Xtrackers will offset losses from the drop in Xtrackers' long position.| IShares ESG vs. JPMorgan BetaBuilders International | IShares ESG vs. JPMorgan Core Plus | IShares ESG vs. JPMorgan BetaBuilders Canada | IShares ESG vs. JPMorgan Emerging Markets |
| Xtrackers vs. Xtrackers MSCI USA | Xtrackers vs. iShares ESG MSCI | Xtrackers vs. SPDR SP 500 | Xtrackers 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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