Correlation Between CI Enhanced and IShares ESG
Can any of the company-specific risk be diversified away by investing in both CI Enhanced and IShares ESG 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 CI Enhanced and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CI Enhanced Short and iShares ESG Equity, you can compare the effects of market volatilities on CI Enhanced and IShares ESG 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 CI Enhanced with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Enhanced and IShares ESG.
Diversification Opportunities for CI Enhanced and IShares ESG
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FSB and IShares is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding CI Enhanced Short and iShares ESG Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Equity and CI Enhanced 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 CI Enhanced Short are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Equity has no effect on the direction of CI Enhanced i.e., CI Enhanced and IShares ESG go up and down completely randomly.
Pair Corralation between CI Enhanced and IShares ESG
Assuming the 90 days trading horizon CI Enhanced is expected to generate 4.59 times less return on investment than IShares ESG. But when comparing it to its historical volatility, CI Enhanced Short is 4.19 times less risky than IShares ESG. It trades about 0.17 of its potential returns per unit of risk. iShares ESG Equity is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,643 in iShares ESG Equity on September 1, 2024 and sell it today you would earn a total of 1,943 from holding iShares ESG Equity or generate 41.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CI Enhanced Short vs. iShares ESG Equity
Performance |
| Timeline |
| CI Enhanced Short |
| iShares ESG Equity |
CI Enhanced and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CI Enhanced and IShares ESG
The main advantage of trading using opposite CI Enhanced and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Enhanced position performs unexpectedly, IShares ESG 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 IShares ESG will offset losses from the drop in IShares ESG's long position.| CI Enhanced vs. CI Investment Grade | CI Enhanced vs. CI Enhanced Government | CI Enhanced vs. CI Preferred Share | CI Enhanced vs. CI Short Term |
| IShares ESG vs. iShares ESG Growth | IShares ESG vs. iShares ESG Balanced | IShares ESG vs. iShares ESG Advanced | IShares ESG vs. iShares ESG Advanced |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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