Correlation Between IShares ESG and IShares Inflation
Can any of the company-specific risk be diversified away by investing in both IShares ESG and IShares Inflation 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 Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG USD and iShares Inflation Hedged, you can compare the effects of market volatilities on IShares ESG and IShares Inflation 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 Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and IShares Inflation.
Diversification Opportunities for IShares ESG and IShares Inflation
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and IShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG USD and iShares Inflation Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Inflation Hedged 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 USD are associated (or correlated) with IShares Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Inflation Hedged has no effect on the direction of IShares ESG i.e., IShares ESG and IShares Inflation go up and down completely randomly.
Pair Corralation between IShares ESG and IShares Inflation
Given the investment horizon of 90 days iShares ESG USD is expected to generate 1.01 times more return on investment than IShares Inflation. However, IShares ESG is 1.01 times more volatile than iShares Inflation Hedged. It trades about 0.09 of its potential returns per unit of risk. iShares Inflation Hedged is currently generating about 0.06 per unit of risk. If you would invest 2,231 in iShares ESG USD on August 30, 2024 and sell it today you would earn a total of 93.00 from holding iShares ESG USD or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG USD vs. iShares Inflation Hedged
Performance |
| Timeline |
| iShares ESG USD |
| iShares Inflation Hedged |
IShares ESG and IShares Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and IShares Inflation
The main advantage of trading using opposite IShares ESG and IShares Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, IShares Inflation 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 Inflation will offset losses from the drop in IShares Inflation's long position.| IShares ESG vs. VanEck Vectors Moodys | IShares ESG vs. BondBloxx ETF Trust | IShares ESG vs. Vanguard ESG Corporate | IShares ESG vs. Vanguard Intermediate Term Corporate |
| IShares Inflation vs. iShares Interest Rate | IShares Inflation vs. iShares Interest Rate | IShares Inflation vs. iShares Edge Investment | IShares Inflation vs. iShares Interest Rate |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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