Correlation Between IShares ESG and Nuveen Dividend

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

Diversification Opportunities for IShares ESG and Nuveen Dividend

0.51

Correlation Coefficient

IShares ESG  Nuveen Dividend

Very weak diversification

The 3 months correlation between IShares and Nuveen is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and Nuveen Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Dividend Growth 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 Nuveen Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Dividend Growth has no effect on the direction of IShares ESG i.e., IShares ESG and Nuveen Dividend go up and down completely randomly.

Pair Corralation between IShares ESG and Nuveen Dividend

Given the investment horizon of 90 days iShares ESG Aware is expected to generate 1.24 times more return on investment than Nuveen Dividend. However, IShares ESG is 1.24 times more volatile than Nuveen Dividend Growth. It trades about 0.12 of its potential returns per unit of risk. Nuveen Dividend Growth is currently generating about 0.11 per unit of risk. If you would invest  9,210  in iShares ESG Aware on October 24, 2024 and sell it today you would earn a total of  4,153  from holding iShares ESG Aware or generate 45.09% return on investment over 90 days.

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

iShares ESG Aware  vs.  Nuveen Dividend Growth

iShares ESG Aware

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Aware are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, IShares ESG is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Nuveen Dividend Growth

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Dividend Growth are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Nuveen Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares ESG and Nuveen Dividend

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

The idea behind iShares ESG Aware and Nuveen Dividend Growth 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..