Correlation Between IShares ESG and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both IShares ESG and Sterling Capital 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 Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG Advanced and Sterling Capital Focus, you can compare the effects of market volatilities on IShares ESG and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Sterling Capital.
Diversification Opportunities for IShares ESG and Sterling Capital
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Sterling is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Advanced and Sterling Capital Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Focus 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 Advanced are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Focus has no effect on the direction of IShares ESG i.e., IShares ESG and Sterling Capital go up and down completely randomly.
Pair Corralation between IShares ESG and Sterling Capital
Given the investment horizon of 90 days iShares ESG Advanced is expected to generate 0.85 times more return on investment than Sterling Capital. However, iShares ESG Advanced is 1.18 times less risky than Sterling Capital. It trades about 0.13 of its potential returns per unit of risk. Sterling Capital Focus is currently generating about 0.05 per unit of risk. If you would invest 3,753 in iShares ESG Advanced on August 27, 2024 and sell it today you would earn a total of 1,436 from holding iShares ESG Advanced or generate 38.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares ESG Advanced vs. Sterling Capital Focus
Performance |
| Timeline |
| iShares ESG Advanced |
| Sterling Capital Focus |
IShares ESG and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and Sterling Capital
The main advantage of trading using opposite IShares ESG and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| IShares ESG vs. Invesco Dynamic Large | IShares ESG vs. Perella Weinberg Partners | IShares ESG vs. HUMANA INC | IShares ESG vs. Aquagold International |
| Sterling Capital vs. Absolute Core Strategy | Sterling Capital vs. iShares ESG Advanced | Sterling Capital vs. PIMCO RAFI Dynamic | Sterling Capital vs. HCM Defender 100 |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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