Correlation Between IShares Core and IShares ESG
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 Core 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 Core Balanced and iShares ESG Growth, you can compare the effects of market volatilities on IShares Core 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 Core with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares ESG.
Diversification Opportunities for IShares Core and IShares ESG
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Balanced and iShares ESG Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Growth and IShares Core 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 Core Balanced 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 Growth has no effect on the direction of IShares Core i.e., IShares Core and IShares ESG go up and down completely randomly.
Pair Corralation between IShares Core and IShares ESG
Assuming the 90 days trading horizon IShares Core is expected to generate 7.39 times less return on investment than IShares ESG. But when comparing it to its historical volatility, iShares Core Balanced is 1.83 times less risky than IShares ESG. It trades about 0.01 of its potential returns per unit of risk. iShares ESG Growth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,852 in iShares ESG Growth on November 27, 2024 and sell it today you would earn a total of 46.00 from holding iShares ESG Growth or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Balanced vs. iShares ESG Growth
Performance |
| Timeline |
| iShares Core Balanced |
| iShares ESG Growth |
IShares Core and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares ESG
The main advantage of trading using opposite IShares Core and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 Core vs. iShares Core Growth | IShares Core vs. Vanguard Balanced Portfolio | IShares Core vs. BMO Balanced ETF | IShares Core vs. Vanguard Conservative ETF |
| IShares ESG vs. iShares ESG Equity | IShares ESG vs. iShares ESG Balanced | IShares ESG vs. iShares ESG Conservative | IShares ESG vs. BMO Balanced ESG |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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