Correlation Between IShares ESG and IShares USD
Can any of the company-specific risk be diversified away by investing in both IShares ESG and IShares USD 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 ESG and IShares USD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG 1 5 and iShares USD Green, you can compare the effects of market volatilities on IShares ESG and IShares USD 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 ESG with a short position of IShares USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and IShares USD.
Diversification Opportunities for IShares ESG and IShares USD
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG 1 5 and iShares USD Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares USD Green and IShares ESG 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 ESG 1 5 are associated (or correlated) with IShares USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares USD Green has no effect on the direction of IShares ESG i.e., IShares ESG and IShares USD go up and down completely randomly.
Pair Corralation between IShares ESG and IShares USD
Given the investment horizon of 90 days iShares ESG 1 5 is expected to generate 0.56 times more return on investment than IShares USD. However, iShares ESG 1 5 is 1.79 times less risky than IShares USD. It trades about 0.04 of its potential returns per unit of risk. iShares USD Green is currently generating about -0.02 per unit of risk. If you would invest 2,476 in iShares ESG 1 5 on August 28, 2024 and sell it today you would earn a total of 9.00 from holding iShares ESG 1 5 or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG 1 5 vs. iShares USD Green
Performance |
| Timeline |
| iShares ESG 1 |
| iShares USD Green |
IShares ESG and IShares USD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and IShares USD
The main advantage of trading using opposite IShares ESG and IShares USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, IShares USD 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 USD will offset losses from the drop in IShares USD's long position.| IShares ESG vs. VanEck Vectors Moodys | IShares ESG vs. Vanguard ESG Corporate | IShares ESG vs. Vanguard Intermediate Term Corporate | IShares ESG vs. Vanguard Long Term Corporate |
| IShares USD vs. Franklin Liberty High | IShares USD vs. Franklin Liberty Senior | IShares USD vs. Franklin Liberty Intermediate | IShares USD vs. Franklin Liberty Short |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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