Correlation Between IShares ESG and IShares Evolved

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

Diversification Opportunities for IShares ESG and IShares Evolved

0.52

Correlation Coefficient

IShares ESG  IShares Evolved

Very weak diversification

The 3 months correlation between IShares and IShares is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and iShares Evolved Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Evolved Tech 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 IShares Evolved. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Evolved Tech has no effect on the direction of IShares ESG i.e., IShares ESG and IShares Evolved go up and down completely randomly.

Pair Corralation between IShares ESG and IShares Evolved

Given the investment horizon of 90 days IShares ESG is expected to generate 1.7 times less return on investment than IShares Evolved. In addition to that, IShares ESG is 1.0 times more volatile than iShares Evolved Technology. It trades about 0.08 of its total potential returns per unit of risk. iShares Evolved Technology is currently generating about 0.13 per unit of volatility. If you would invest  5,506  in iShares Evolved Technology on October 5, 2024 and sell it today you would earn a total of  3,143  from holding iShares Evolved Technology or generate 57.08% 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.  iShares Evolved Technology

iShares ESG Aware

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Aware are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, IShares ESG is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

iShares Evolved Tech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Evolved Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, IShares Evolved may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with IShares ESG and IShares Evolved

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

The idea behind iShares ESG Aware and iShares Evolved Technology 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.