Correlation Between IShares ESG and Stance Equity
Can any of the company-specific risk be diversified away by investing in both IShares ESG and Stance Equity 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 Stance Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG Screened and Stance Equity ESG, you can compare the effects of market volatilities on IShares ESG and Stance Equity 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 Stance Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Stance Equity.
Diversification Opportunities for IShares ESG and Stance Equity
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Stance is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Screened and Stance Equity ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stance Equity ESG 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 Screened are associated (or correlated) with Stance Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stance Equity ESG has no effect on the direction of IShares ESG i.e., IShares ESG and Stance Equity go up and down completely randomly.
Pair Corralation between IShares ESG and Stance Equity
Considering the 90-day investment horizon iShares ESG Screened is expected to generate 1.66 times more return on investment than Stance Equity. However, IShares ESG is 1.66 times more volatile than Stance Equity ESG. It trades about 0.25 of its potential returns per unit of risk. Stance Equity ESG is currently generating about 0.3 per unit of risk. If you would invest 4,243 in iShares ESG Screened on August 31, 2024 and sell it today you would earn a total of 303.00 from holding iShares ESG Screened or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares ESG Screened vs. Stance Equity ESG
Performance |
| Timeline |
| iShares ESG Screened |
| Stance Equity ESG |
IShares ESG and Stance Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ESG and Stance Equity
The main advantage of trading using opposite IShares ESG and Stance Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, Stance Equity 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 Stance Equity will offset losses from the drop in Stance Equity's long position.| IShares ESG vs. iShares ESG Screened | IShares ESG vs. iShares ESG Screened | IShares ESG vs. iShares ESG Advanced | IShares ESG vs. iShares ESG Advanced |
| Stance Equity vs. iShares ESG Screened | Stance Equity vs. Innovator Equity Accelerated | Stance Equity vs. iShares ESG Screened | Stance Equity vs. Innovator Equity Accelerated |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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