Correlation Between IShares VII and BlackRock ESG

Can any of the company-specific risk be diversified away by investing in both IShares VII and BlackRock 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 VII and BlackRock ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares VII Public and BlackRock ESG Multi Asset, you can compare the effects of market volatilities on IShares VII and BlackRock 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 VII with a short position of BlackRock ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and BlackRock ESG.

Diversification Opportunities for IShares VII and BlackRock ESG

0.75

Correlation Coefficient

IShares VII  BlackRock ESG

Poor diversification

The 3 months correlation between IShares and BlackRock is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII Public and BlackRock ESG Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock ESG Multi and IShares VII 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 VII Public are associated (or correlated) with BlackRock ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock ESG Multi has no effect on the direction of IShares VII i.e., IShares VII and BlackRock ESG go up and down completely randomly.

Pair Corralation between IShares VII and BlackRock ESG

Assuming the 90 days trading horizon iShares VII Public is expected to generate 2.3 times more return on investment than BlackRock ESG. However, IShares VII is 2.3 times more volatile than BlackRock ESG Multi Asset. It trades about 0.09 of its potential returns per unit of risk. BlackRock ESG Multi Asset is currently generating about 0.01 per unit of risk. If you would invest  12,440  in iShares VII Public on November 28, 2024 and sell it today you would earn a total of  895.00  from holding iShares VII Public or generate 7.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

iShares VII Public  vs.  BlackRock ESG Multi Asset

iShares VII Public

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares VII Public are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares VII may actually be approaching a critical reversion point that can send shares even higher in March 2025.

BlackRock ESG Multi

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock ESG Multi Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BlackRock ESG is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares VII and BlackRock ESG

The main advantage of trading using opposite IShares VII and BlackRock ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares VII position performs unexpectedly, BlackRock 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 BlackRock ESG will offset losses from the drop in BlackRock ESG's long position.

The idea behind iShares VII Public and BlackRock ESG Multi Asset 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .