Correlation Between IShares ESG and Simplify Equity
Can any of the company-specific risk be diversified away by investing in both IShares ESG and Simplify Equity 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 Simplify Equity 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 Simplify Equity PLUS, you can compare the effects of market volatilities on IShares ESG and Simplify Equity 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 Simplify Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Simplify Equity.
Diversification Opportunities for IShares ESG and Simplify Equity
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Simplify is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and Simplify Equity PLUS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Equity PLUS 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 Simplify Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Equity PLUS has no effect on the direction of IShares ESG i.e., IShares ESG and Simplify Equity go up and down completely randomly.
Pair Corralation between IShares ESG and Simplify Equity
Given the investment horizon of 90 days iShares ESG Aware is expected to generate 0.84 times more return on investment than Simplify Equity. However, iShares ESG Aware is 1.2 times less risky than Simplify Equity. It trades about -0.1 of its potential returns per unit of risk. Simplify Equity PLUS is currently generating about -0.16 per unit of risk. If you would invest 13,173 in iShares ESG Aware on November 28, 2024 and sell it today you would lose (188.00) from holding iShares ESG Aware or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG Aware vs. Simplify Equity PLUS
Performance |
| Timeline |
| iShares ESG Aware |
| Simplify Equity PLUS |
IShares ESG and Simplify Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and Simplify Equity
The main advantage of trading using opposite IShares ESG and Simplify Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, Simplify Equity 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 Simplify Equity will offset losses from the drop in Simplify Equity'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 |
| Simplify Equity vs. Simplify Equity PLUS | Simplify Equity vs. Simplify Equity PLUS | Simplify Equity vs. Simplify Interest Rate |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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