Correlation Between NYSE Composite and IShares ESG
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and iShares ESG Advanced, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and IShares ESG.
Diversification Opportunities for NYSE Composite and IShares ESG
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NYSE and IShares is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and iShares ESG Advanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Advanced and NYSE Composite 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 NYSE Composite 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 Advanced has no effect on the direction of NYSE Composite i.e., NYSE Composite and IShares ESG go up and down completely randomly.
Pair Corralation between NYSE Composite and IShares ESG
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.56 times more return on investment than IShares ESG. However, NYSE Composite is 1.56 times more volatile than iShares ESG Advanced. It trades about 0.11 of its potential returns per unit of risk. iShares ESG Advanced is currently generating about 0.06 per unit of risk. If you would invest 1,766,949 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 260,255 from holding NYSE Composite or generate 14.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.47% |
Values | Daily Returns |
NYSE Composite vs. iShares ESG Advanced
Performance |
Timeline |
NYSE Composite and IShares ESG Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
iShares ESG Advanced
Pair trading matchups for IShares ESG
Pair Trading with NYSE Composite and IShares ESG
The main advantage of trading using opposite NYSE Composite and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
IShares ESG vs. iShares ESG USD | IShares ESG vs. FlexShares Disciplined Duration | IShares ESG vs. iShares ESG 1 5 | IShares ESG vs. First Trust Emerging |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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