Correlation Between IShares ESG and Columbia Emerging

Can any of the company-specific risk be diversified away by investing in both IShares ESG and Columbia Emerging 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 Columbia Emerging 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 Columbia Emerging Markets, you can compare the effects of market volatilities on IShares ESG and Columbia Emerging 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 Columbia Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Columbia Emerging.

Diversification Opportunities for IShares ESG and Columbia Emerging

0.99

Correlation Coefficient

IShares ESG  Columbia Emerging

No risk reduction

The 3 months correlation between IShares and Columbia is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and Columbia Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Emerging Markets 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 Columbia Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Emerging Markets has no effect on the direction of IShares ESG i.e., IShares ESG and Columbia Emerging go up and down completely randomly.

Pair Corralation between IShares ESG and Columbia Emerging

Given the investment horizon of 90 days IShares ESG is expected to generate 1.25 times less return on investment than Columbia Emerging. In addition to that, IShares ESG is 1.07 times more volatile than Columbia Emerging Markets. It trades about 0.03 of its total potential returns per unit of risk. Columbia Emerging Markets is currently generating about 0.04 per unit of volatility. If you would invest  2,103  in Columbia Emerging Markets on September 27, 2024 and sell it today you would earn a total of  13.00  from holding Columbia Emerging Markets or generate 0.62% return on investment over 90 days.

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

iShares ESG Aware  vs.  Columbia Emerging Markets

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. In spite of latest unfluctuating performance, the Etf's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Columbia Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with IShares ESG and Columbia Emerging

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

The idea behind iShares ESG Aware and Columbia Emerging Markets 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.