Correlation Between IShares ESG and Roundhill ETF
Can any of the company-specific risk be diversified away by investing in both IShares ESG and Roundhill ETF 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 Roundhill ETF 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 Roundhill ETF Trust, you can compare the effects of market volatilities on IShares ESG and Roundhill ETF 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 Roundhill ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Roundhill ETF.
Diversification Opportunities for IShares ESG and Roundhill ETF
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Roundhill is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and Roundhill ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill ETF Trust 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 Roundhill ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill ETF Trust has no effect on the direction of IShares ESG i.e., IShares ESG and Roundhill ETF go up and down completely randomly.
Pair Corralation between IShares ESG and Roundhill ETF
Given the investment horizon of 90 days iShares ESG Aware is expected to generate 1.13 times more return on investment than Roundhill ETF. However, IShares ESG is 1.13 times more volatile than Roundhill ETF Trust. It trades about 0.4 of its potential returns per unit of risk. Roundhill ETF Trust is currently generating about 0.35 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. Roundhill ETF Trust
Performance |
| Timeline |
| iShares ESG Aware |
| Roundhill ETF Trust |
IShares ESG and Roundhill ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and Roundhill ETF
The main advantage of trading using opposite IShares ESG and Roundhill ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, Roundhill ETF 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 Roundhill ETF will offset losses from the drop in Roundhill ETF'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 |
| Roundhill ETF vs. Vanguard Total Stock | Roundhill ETF vs. SPDR SP 500 | Roundhill ETF vs. iShares Core SP | Roundhill ETF vs. Vanguard Dividend Appreciation |
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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