Correlation Between IShares Intermediate and IShares ESG

Can any of the company-specific risk be diversified away by investing in both IShares Intermediate and IShares ESG 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 Intermediate and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Intermediate GovernmentCredit and iShares ESG 1 5, you can compare the effects of market volatilities on IShares Intermediate and IShares ESG 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 Intermediate with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Intermediate and IShares ESG.

Diversification Opportunities for IShares Intermediate and IShares ESG

0.86

Correlation Coefficient

IShares Intermediate  IShares ESG

Very poor diversification

The 3 months correlation between IShares and IShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares Intermediate Governmen and iShares ESG 1 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG 1 and IShares Intermediate 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 Intermediate GovernmentCredit are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG 1 has no effect on the direction of IShares Intermediate i.e., IShares Intermediate and IShares ESG go up and down completely randomly.

Pair Corralation between IShares Intermediate and IShares ESG

Considering the 90-day investment horizon iShares Intermediate GovernmentCredit is expected to under-perform the IShares ESG. In addition to that, IShares Intermediate is 1.3 times more volatile than iShares ESG 1 5. It trades about -0.07 of its total potential returns per unit of risk. iShares ESG 1 5 is currently generating about 0.01 per unit of volatility. If you would invest  2,485  in iShares ESG 1 5 on September 12, 2024 and sell it today you would earn a total of  2.00  from holding iShares ESG 1 5 or generate 0.08% return on investment over 90 days.

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

iShares Intermediate Governmen  vs.  iShares ESG 1 5

iShares Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Intermediate GovernmentCredit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IShares Intermediate is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

iShares ESG 1

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days iShares ESG 1 5 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares ESG is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Intermediate and IShares ESG

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

The idea behind iShares Intermediate GovernmentCredit and iShares ESG 1 5 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.