Correlation Between SPDR MSCI and IShares ESG
Can any of the company-specific risk be diversified away by investing in both SPDR MSCI 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 SPDR MSCI and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR MSCI USA and iShares ESG Aware, you can compare the effects of market volatilities on SPDR MSCI 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 SPDR MSCI with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR MSCI and IShares ESG.
Diversification Opportunities for SPDR MSCI and IShares ESG
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MSCI USA 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 SPDR MSCI 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 SPDR MSCI USA 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 SPDR MSCI i.e., SPDR MSCI and IShares ESG go up and down completely randomly.
Pair Corralation between SPDR MSCI and IShares ESG
Given the investment horizon of 90 days SPDR MSCI is expected to generate 2.14 times less return on investment than IShares ESG. In addition to that, SPDR MSCI is 1.4 times more volatile than iShares ESG Aware. It trades about 0.12 of its total potential returns per unit of risk. iShares ESG Aware is currently generating about 0.35 per unit of volatility. If you would invest 2,876 in iShares ESG Aware on August 30, 2024 and sell it today you would earn a total of 232.00 from holding iShares ESG Aware or generate 8.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
SPDR MSCI USA vs. iShares ESG Aware
Performance |
| Timeline |
| SPDR MSCI USA |
| iShares ESG Aware |
SPDR MSCI and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR MSCI and IShares ESG
The main advantage of trading using opposite SPDR MSCI and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR MSCI 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.| SPDR MSCI vs. SPDR MSCI ACWI | SPDR MSCI vs. iShares iBonds Dec | SPDR MSCI vs. iShares iBonds Dec | SPDR MSCI vs. iShares iBonds Dec |
| IShares ESG vs. iShares ESG MSCI | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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