Correlation Between IShares Broad and IShares ESG
Can any of the company-specific risk be diversified away by investing in both IShares Broad 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 Broad 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 Broad USD and iShares ESG Advanced, you can compare the effects of market volatilities on IShares Broad 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 Broad with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Broad and IShares ESG.
Diversification Opportunities for IShares Broad and IShares ESG
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Broad USD and iShares ESG Advanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Advanced and IShares Broad 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 Broad USD 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 Advanced has no effect on the direction of IShares Broad i.e., IShares Broad and IShares ESG go up and down completely randomly.
Pair Corralation between IShares Broad and IShares ESG
Given the investment horizon of 90 days IShares Broad is expected to generate 1.12 times less return on investment than IShares ESG. But when comparing it to its historical volatility, iShares Broad USD is 1.13 times less risky than IShares ESG. It trades about 0.2 of its potential returns per unit of risk. iShares ESG Advanced is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,411 in iShares ESG Advanced on September 3, 2024 and sell it today you would earn a total of 276.00 from holding iShares ESG Advanced or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Broad USD vs. iShares ESG Advanced
Performance |
| Timeline |
| iShares Broad USD |
| iShares ESG Advanced |
IShares Broad and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Broad and IShares ESG
The main advantage of trading using opposite IShares Broad and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Broad 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 Broad vs. iShares iBoxx Investment | IShares Broad vs. SPDR Bloomberg High | IShares Broad vs. iShares TIPS Bond | IShares Broad vs. iShares 20 Year |
| IShares ESG vs. iShares iBoxx Investment | IShares ESG vs. SPDR Bloomberg High | IShares ESG vs. iShares TIPS Bond | IShares ESG vs. iShares 20 Year |
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 CEOs Directory module to screen CEOs from public companies around the world.
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