Correlation Between IShares ESG and Exchange Traded

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

By analyzing existing cross correlation between iShares ESG Aware and Exchange Traded Concepts, you can compare the effects of market volatilities on IShares ESG and Exchange Traded 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 Exchange Traded. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Exchange Traded.

Diversification Opportunities for IShares ESG and Exchange Traded

0.0

Correlation Coefficient

IShares ESG  Exchange Traded

Pay attention - limited upside

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

Pair Corralation between IShares ESG and Exchange Traded

If you would invest  3,589  in iShares ESG Aware on October 7, 2024 and sell it today you would earn a total of  8.00  from holding iShares ESG Aware or generate 0.22% return on investment over 90 days.

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

iShares ESG Aware  vs.  Exchange Traded Concepts

iShares ESG Aware

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares ESG Aware has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares ESG is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Exchange Traded Concepts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exchange Traded Concepts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Exchange Traded is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares ESG and Exchange Traded

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

The idea behind iShares ESG Aware and Exchange Traded Concepts 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.