Correlation Between IShares ESG and SPDR SSGA

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

Diversification Opportunities for IShares ESG and SPDR SSGA

0.79

Correlation Coefficient

IShares ESG  SPDR SSGA

Poor diversification

The 3 months correlation between IShares and SPDR is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and SPDR SSGA Gender in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA Gender 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 SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Gender has no effect on the direction of IShares ESG i.e., IShares ESG and SPDR SSGA go up and down completely randomly.

Pair Corralation between IShares ESG and SPDR SSGA

Given the investment horizon of 90 days iShares ESG Aware is expected to generate 1.04 times more return on investment than SPDR SSGA. However, IShares ESG is 1.04 times more volatile than SPDR SSGA Gender. It trades about 0.21 of its potential returns per unit of risk. SPDR SSGA Gender is currently generating about 0.21 per unit of risk. If you would invest  12,137  in iShares ESG Aware on September 11, 2024 and sell it today you would earn a total of  1,138  from holding iShares ESG Aware or generate 9.38% return on investment over 90 days.

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

iShares ESG Aware  vs.  SPDR SSGA Gender

iShares ESG Aware

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Aware are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, IShares ESG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SPDR SSGA Gender

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SSGA Gender are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, SPDR SSGA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares ESG and SPDR SSGA

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

The idea behind iShares ESG Aware and SPDR SSGA Gender 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.