Correlation Between IShares Trust and Nuveen ESG
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Nuveen 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 Trust and Nuveen ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Nuveen ESG High, you can compare the effects of market volatilities on IShares Trust and Nuveen 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 Trust with a short position of Nuveen ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Nuveen ESG.
Diversification Opportunities for IShares Trust and Nuveen ESG
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IShares and Nuveen is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Nuveen ESG High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG High and IShares Trust 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 Trust are associated (or correlated) with Nuveen ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen ESG High has no effect on the direction of IShares Trust i.e., IShares Trust and Nuveen ESG go up and down completely randomly.
Pair Corralation between IShares Trust and Nuveen ESG
Given the investment horizon of 90 days IShares Trust is expected to generate 1.87 times less return on investment than Nuveen ESG. In addition to that, IShares Trust is 1.12 times more volatile than Nuveen ESG High. It trades about 0.1 of its total potential returns per unit of risk. Nuveen ESG High is currently generating about 0.2 per unit of volatility. If you would invest 2,125 in Nuveen ESG High on September 4, 2024 and sell it today you would earn a total of 21.00 from holding Nuveen ESG High or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Nuveen ESG High
Performance |
| Timeline |
| iShares Trust |
| Nuveen ESG High |
IShares Trust and Nuveen ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Nuveen ESG
The main advantage of trading using opposite IShares Trust and Nuveen ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Nuveen 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 Nuveen ESG will offset losses from the drop in Nuveen ESG's long position.The idea behind iShares Trust and Nuveen ESG High pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nuveen ESG vs. iShares iBoxx Investment | Nuveen ESG vs. SPDR Bloomberg High | Nuveen ESG vs. iShares TIPS Bond | Nuveen ESG vs. iShares 20 Year |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |