Correlation Between IShares Aaa and IShares ESG
Can any of the company-specific risk be diversified away by investing in both IShares Aaa 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 IShares Aaa and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Aaa and iShares ESG Advanced, you can compare the effects of market volatilities on IShares Aaa 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 IShares Aaa with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Aaa and IShares ESG.
Diversification Opportunities for IShares Aaa and IShares ESG
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Aaa 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 IShares Aaa 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 iShares Aaa 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 IShares Aaa i.e., IShares Aaa and IShares ESG go up and down completely randomly.
Pair Corralation between IShares Aaa and IShares ESG
Given the investment horizon of 90 days iShares Aaa is expected to generate 0.85 times more return on investment than IShares ESG. However, iShares Aaa is 1.18 times less risky than IShares ESG. It trades about -0.09 of its potential returns per unit of risk. iShares ESG Advanced is currently generating about -0.08 per unit of risk. If you would invest 4,772 in iShares Aaa on August 25, 2024 and sell it today you would lose (37.00) from holding iShares Aaa or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Aaa vs. iShares ESG Advanced
Performance |
| Timeline |
| iShares Aaa |
| iShares ESG Advanced |
IShares Aaa and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Aaa and IShares ESG
The main advantage of trading using opposite IShares Aaa and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Aaa 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.| IShares Aaa vs. VanEck Vectors Moodys | IShares Aaa vs. Vanguard ESG Corporate | IShares Aaa vs. Vanguard Intermediate Term Corporate | IShares Aaa vs. Vanguard Long Term Corporate |
| IShares ESG vs. Senstar Technologies | IShares ESG vs. ImmuCell | IShares ESG vs. Anika Therapeutics | IShares ESG vs. Aquagold International |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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