Correlation Between Nuveen ESG and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Nuveen ESG and IShares MSCI 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 Nuveen ESG and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen ESG Aggregate and iShares MSCI EAFE, you can compare the effects of market volatilities on Nuveen ESG and IShares MSCI 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 Nuveen ESG with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen ESG and IShares MSCI.
Diversification Opportunities for Nuveen ESG and IShares MSCI
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nuveen and IShares is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen ESG Aggregate and iShares MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI EAFE and Nuveen 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 Nuveen ESG Aggregate are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI EAFE has no effect on the direction of Nuveen ESG i.e., Nuveen ESG and IShares MSCI go up and down completely randomly.
Pair Corralation between Nuveen ESG and IShares MSCI
Given the investment horizon of 90 days Nuveen ESG Aggregate is expected to generate 0.41 times more return on investment than IShares MSCI. However, Nuveen ESG Aggregate is 2.43 times less risky than IShares MSCI. It trades about 0.08 of its potential returns per unit of risk. iShares MSCI EAFE is currently generating about -0.16 per unit of risk. If you would invest 2,202 in Nuveen ESG Aggregate on August 30, 2024 and sell it today you would earn a total of 13.00 from holding Nuveen ESG Aggregate or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen ESG Aggregate vs. iShares MSCI EAFE
Performance |
| Timeline |
| Nuveen ESG Aggregate |
| iShares MSCI EAFE |
Nuveen ESG and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen ESG and IShares MSCI
The main advantage of trading using opposite Nuveen ESG and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen ESG position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.| Nuveen ESG vs. NuShares Enhanced Yield | Nuveen ESG vs. NuShares ETF Trust | Nuveen ESG vs. Nuveen ESG Small Cap | Nuveen ESG vs. Nuveen ESG Large Cap |
| IShares MSCI vs. iShares MSCI Emerging | IShares MSCI vs. iShares Core Aggregate | IShares MSCI vs. iShares Russell 2000 | IShares MSCI vs. iShares MSCI Japan |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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