Correlation Between IShares ESG and THCX

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

Diversification Opportunities for IShares ESG and THCX

0.0

Correlation Coefficient

IShares ESG  THCX

Pay attention - limited upside

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

Pair Corralation between IShares ESG and THCX

If you would invest (100.00) in THCX on December 5, 2024 and sell it today you would earn a total of  100.00  from holding THCX or generate -100.0% 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.  THCX

iShares ESG Aware

Risk-Adjusted Performance

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 comparatively stable basic 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.

THCX

Risk-Adjusted Performance

Very Weak

Over the last 90 days THCX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, THCX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares ESG and THCX

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

The idea behind iShares ESG Aware and THCX 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.