Correlation Between IShares MSCI and IShares ESG
Can any of the company-specific risk be diversified away by investing in both IShares 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 IShares 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 iShares MSCI USA and iShares ESG Aware, you can compare the effects of market volatilities on IShares 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 IShares MSCI with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares ESG.
Diversification Opportunities for IShares MSCI and IShares ESG
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares 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 IShares 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 iShares 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 IShares MSCI i.e., IShares MSCI and IShares ESG go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares ESG
Given the investment horizon of 90 days IShares MSCI is expected to generate 1.03 times less return on investment than IShares ESG. In addition to that, IShares MSCI is 1.02 times more volatile than iShares ESG Aware. It trades about 0.17 of its total potential returns per unit of risk. iShares ESG Aware is currently generating about 0.18 per unit of volatility. If you would invest 8,993 in iShares ESG Aware on August 25, 2024 and sell it today you would earn a total of 4,130 from holding iShares ESG Aware or generate 45.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI USA vs. iShares ESG Aware
Performance |
| Timeline |
| iShares MSCI USA |
| iShares ESG Aware |
IShares MSCI and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares ESG
The main advantage of trading using opposite IShares MSCI and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 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.| IShares MSCI vs. iShares Equity Factor | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares Edge MSCI |
| IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. Vanguard ESG Stock | 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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