Correlation Between STF Tactical and IShares ESG
Can any of the company-specific risk be diversified away by investing in both STF Tactical 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 STF Tactical and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STF Tactical Growth and iShares ESG Aware, you can compare the effects of market volatilities on STF Tactical 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 STF Tactical with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of STF Tactical and IShares ESG.
Diversification Opportunities for STF Tactical and IShares ESG
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STF and IShares is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding STF Tactical Growth 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 STF Tactical 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 STF Tactical Growth 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 STF Tactical i.e., STF Tactical and IShares ESG go up and down completely randomly.
Pair Corralation between STF Tactical and IShares ESG
Considering the 90-day investment horizon STF Tactical Growth is expected to generate 2.25 times more return on investment than IShares ESG. However, STF Tactical is 2.25 times more volatile than iShares ESG Aware. It trades about 0.08 of its potential returns per unit of risk. iShares ESG Aware is currently generating about 0.13 per unit of risk. If you would invest 2,782 in STF Tactical Growth on August 26, 2024 and sell it today you would earn a total of 678.00 from holding STF Tactical Growth or generate 24.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STF Tactical Growth vs. iShares ESG Aware
Performance |
| Timeline |
| STF Tactical Growth |
| iShares ESG Aware |
STF Tactical and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STF Tactical and IShares ESG
The main advantage of trading using opposite STF Tactical and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STF Tactical 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.The idea behind STF Tactical Growth and iShares ESG Aware pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Advanced |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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