Correlation Between IShares Select and Nuveen ESG

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

By analyzing existing cross correlation between iShares Select Dividend and Nuveen ESG Large Cap, you can compare the effects of market volatilities on IShares Select and Nuveen 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 Select with a short position of Nuveen ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Select and Nuveen ESG.

Diversification Opportunities for IShares Select and Nuveen ESG

0.96

Correlation Coefficient

IShares Select  Nuveen ESG

Almost no diversification

The 3 months correlation between IShares and Nuveen is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Select Dividend and Nuveen ESG Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG Large and IShares Select 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 Select Dividend are associated (or correlated) with Nuveen ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen ESG Large has no effect on the direction of IShares Select i.e., IShares Select and Nuveen ESG go up and down completely randomly.

Pair Corralation between IShares Select and Nuveen ESG

Considering the 90-day investment horizon iShares Select Dividend is expected to generate 1.06 times more return on investment than Nuveen ESG. However, IShares Select is 1.06 times more volatile than Nuveen ESG Large Cap. It trades about 0.05 of its potential returns per unit of risk. Nuveen ESG Large Cap is currently generating about 0.04 per unit of risk. If you would invest  12,990  in iShares Select Dividend on December 28, 2024 and sell it today you would earn a total of  284.00  from holding iShares Select Dividend or generate 2.19% return on investment over 90 days.

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

iShares Select Dividend  vs.  Nuveen ESG Large Cap

iShares Select Dividend

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Select Dividend are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, IShares Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen ESG Large

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen ESG Large Cap are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable essential indicators, Nuveen ESG is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares Select and Nuveen ESG

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

The idea behind iShares Select Dividend and Nuveen ESG Large Cap 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.