Correlation Between Nuveen ESG and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Nuveen 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 Nuveen 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 Nuveen ESG Small Cap and iShares ESG Aware, you can compare the effects of market volatilities on Nuveen 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 Nuveen ESG with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen ESG and IShares ESG.
Diversification Opportunities for Nuveen ESG and IShares ESG
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nuveen and IShares is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen ESG Small Cap 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 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 Small Cap 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 Nuveen ESG i.e., Nuveen ESG and IShares ESG go up and down completely randomly.
Pair Corralation between Nuveen ESG and IShares ESG
Given the investment horizon of 90 days Nuveen ESG Small Cap is expected to generate about the same return on investment as iShares ESG Aware. However, Nuveen ESG is 1.17 times more volatile than iShares ESG Aware. It trades about 0.19 of its potential returns per unit of risk. iShares ESG Aware is currently producing about 0.22 per unit of risk. If you would invest 7,695 in iShares ESG Aware on November 5, 2024 and sell it today you would earn a total of 257.00 from holding iShares ESG Aware or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen ESG Small Cap vs. iShares ESG Aware
Performance |
| Timeline |
| Nuveen ESG Small |
| iShares ESG Aware |
Nuveen ESG and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen ESG and IShares ESG
The main advantage of trading using opposite Nuveen ESG and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen 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.| Nuveen ESG vs. Nuveen ESG Large Cap | Nuveen ESG vs. Nuveen ESG Large Cap | Nuveen ESG vs. Nuveen ESG Mid Cap | Nuveen ESG vs. Nuveen ESG Mid Cap |
| IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares MSCI USA |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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