Correlation Between Stance Equity and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Stance Equity 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 Stance Equity and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stance Equity ESG and iShares ESG Screened, you can compare the effects of market volatilities on Stance Equity 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 Stance Equity with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stance Equity and IShares ESG.
Diversification Opportunities for Stance Equity and IShares ESG
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Stance and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Stance Equity ESG and iShares ESG Screened in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Screened and Stance Equity 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 Stance Equity ESG 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 Screened has no effect on the direction of Stance Equity i.e., Stance Equity and IShares ESG go up and down completely randomly.
Pair Corralation between Stance Equity and IShares ESG
Given the investment horizon of 90 days Stance Equity is expected to generate 1.39 times less return on investment than IShares ESG. But when comparing it to its historical volatility, Stance Equity ESG is 1.4 times less risky than IShares ESG. It trades about 0.07 of its potential returns per unit of risk. iShares ESG Screened is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,289 in iShares ESG Screened on August 28, 2024 and sell it today you would earn a total of 1,286 from holding iShares ESG Screened or generate 39.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stance Equity ESG vs. iShares ESG Screened
Performance |
| Timeline |
| Stance Equity ESG |
| iShares ESG Screened |
Stance Equity and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stance Equity and IShares ESG
The main advantage of trading using opposite Stance Equity and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stance Equity 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.| Stance Equity vs. Morningstar Unconstrained Allocation | Stance Equity vs. High Yield Municipal Fund | Stance Equity vs. Via Renewables | Stance Equity vs. Knife River |
| IShares ESG vs. Vanguard Mid Cap Index | IShares ESG vs. iShares Core SP | IShares ESG vs. SPDR SP MIDCAP | IShares ESG vs. First Trust Dorsey |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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