Correlation Between IShares MSCI and Columbia Sustainable

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

By analyzing existing cross correlation between iShares MSCI ACWI and Columbia Sustainable Equity, you can compare the effects of market volatilities on IShares MSCI and Columbia Sustainable 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 MSCI with a short position of Columbia Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Columbia Sustainable.

Diversification Opportunities for IShares MSCI and Columbia Sustainable

0.0

Correlation Coefficient

IShares MSCI  Columbia Sustainable

Pay attention - limited upside

The 3 months correlation between IShares and Columbia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI ACWI and Columbia Sustainable Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sustainable and IShares MSCI 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 MSCI ACWI are associated (or correlated) with Columbia Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Sustainable has no effect on the direction of IShares MSCI i.e., IShares MSCI and Columbia Sustainable go up and down completely randomly.

Pair Corralation between IShares MSCI and Columbia Sustainable

If you would invest  19,457  in iShares MSCI ACWI on December 20, 2024 and sell it today you would earn a total of  11.00  from holding iShares MSCI ACWI or generate 0.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

iShares MSCI ACWI  vs.  Columbia Sustainable Equity

iShares MSCI ACWI

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares MSCI ACWI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, IShares MSCI is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Columbia Sustainable

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbia Sustainable Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Columbia Sustainable is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares MSCI and Columbia Sustainable

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

The idea behind iShares MSCI ACWI and Columbia Sustainable Equity 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..