Correlation Between IShares ESG and IShares ESG
Can any of the company-specific risk be diversified away by investing in both IShares ESG 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 IShares ESG and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG Equity and iShares ESG Conservative, you can compare the effects of market volatilities on IShares ESG 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 IShares ESG with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and IShares ESG.
Diversification Opportunities for IShares ESG and IShares ESG
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Equity and iShares ESG Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Conservative 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 Equity 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 Conservative has no effect on the direction of IShares ESG i.e., IShares ESG and IShares ESG go up and down completely randomly.
Pair Corralation between IShares ESG and IShares ESG
Assuming the 90 days trading horizon iShares ESG Equity is expected to generate 1.61 times more return on investment than IShares ESG. However, IShares ESG is 1.61 times more volatile than iShares ESG Conservative. It trades about 0.18 of its potential returns per unit of risk. iShares ESG Conservative is currently generating about 0.17 per unit of risk. 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 Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG Equity vs. iShares ESG Conservative
Performance |
| Timeline |
| iShares ESG Equity |
| iShares ESG Conservative |
IShares ESG and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and IShares ESG
The main advantage of trading using opposite IShares ESG and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG 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.| IShares ESG vs. iShares ESG Growth | IShares ESG vs. iShares ESG Balanced | IShares ESG vs. iShares ESG Advanced | IShares ESG vs. iShares ESG Advanced |
| IShares ESG vs. Vanguard Conservative ETF | IShares ESG vs. Vanguard Balanced Portfolio | IShares ESG vs. iShares Core Income | IShares ESG vs. iShares Core Balanced |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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