Correlation Between Strategy Shares and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Strategy Shares 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 Strategy Shares and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategy Shares Nasdaq and iShares ESG Aware, you can compare the effects of market volatilities on Strategy Shares 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 Strategy Shares with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategy Shares and IShares ESG.
Diversification Opportunities for Strategy Shares and IShares ESG
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Strategy and IShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Strategy Shares Nasdaq and iShares ESG Aware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aware and Strategy Shares 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 Strategy Shares Nasdaq 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 Aware has no effect on the direction of Strategy Shares i.e., Strategy Shares and IShares ESG go up and down completely randomly.
Pair Corralation between Strategy Shares and IShares ESG
Given the investment horizon of 90 days Strategy Shares Nasdaq is expected to generate 1.39 times more return on investment than IShares ESG. However, Strategy Shares is 1.39 times more volatile than iShares ESG Aware. It trades about 0.46 of its potential returns per unit of risk. iShares ESG Aware is currently generating about 0.29 per unit of risk. If you would invest 2,138 in Strategy Shares Nasdaq on September 1, 2024 and sell it today you would earn a total of 102.00 from holding Strategy Shares Nasdaq or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Strategy Shares Nasdaq vs. iShares ESG Aware
Performance |
| Timeline |
| Strategy Shares Nasdaq |
| iShares ESG Aware |
Strategy Shares and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategy Shares and IShares ESG
The main advantage of trading using opposite Strategy Shares and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategy Shares 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.| Strategy Shares vs. NEOS ETF Trust | Strategy Shares vs. First Trust Multi Asset | Strategy Shares vs. Amplify High Income | Strategy Shares vs. Global X Russell |
| IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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