Correlation Between International Business and IShares ESG
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and iShares ESG Aware, you can compare the effects of market volatilities on International Business 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 International Business with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and IShares ESG.
Diversification Opportunities for International Business and IShares ESG
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and IShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine 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 International Business 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 International Business Machines 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 International Business i.e., International Business and IShares ESG go up and down completely randomly.
Pair Corralation between International Business and IShares ESG
Considering the 90-day investment horizon International Business Machines is expected to generate 3.46 times more return on investment than IShares ESG. However, International Business is 3.46 times more volatile than iShares ESG Aware. It trades about 0.38 of its potential returns per unit of risk. iShares ESG Aware is currently generating about 0.35 per unit of risk. If you would invest 20,510 in International Business Machines on September 1, 2024 and sell it today you would earn a total of 2,231 from holding International Business Machines or generate 10.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
International Business Machine vs. iShares ESG Aware
Performance |
| Timeline |
| International Business |
| iShares ESG Aware |
International Business and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and IShares ESG
The main advantage of trading using opposite International Business and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.| International Business vs. FiscalNote Holdings | International Business vs. Innodata | International Business vs. Aurora Innovation | International Business vs. Conduent |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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