Correlation Between IA Clarington and IShares ESG

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

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

Diversification Opportunities for IA Clarington and IShares ESG

0.74

Correlation Coefficient

IA Clarington  IShares ESG

Poor diversification

The 3 months correlation between IGAF and IShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding IA Clarington Loomis and iShares ESG Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Growth and IA Clarington 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 IA Clarington Loomis 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 Growth has no effect on the direction of IA Clarington i.e., IA Clarington and IShares ESG go up and down completely randomly.

Pair Corralation between IA Clarington and IShares ESG

Assuming the 90 days trading horizon IA Clarington Loomis is expected to generate 0.97 times more return on investment than IShares ESG. However, IA Clarington Loomis is 1.03 times less risky than IShares ESG. It trades about -0.04 of its potential returns per unit of risk. iShares ESG Growth is currently generating about -0.05 per unit of risk. If you would invest  1,567  in IA Clarington Loomis on December 27, 2024 and sell it today you would lose (32.00) from holding IA Clarington Loomis or give up 2.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

IA Clarington Loomis  vs.  iShares ESG Growth

IA Clarington Loomis

Risk-Adjusted Performance

Very Weak

Over the last 90 days IA Clarington Loomis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IA Clarington is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares ESG Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares ESG Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares ESG is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IA Clarington and IShares ESG

The main advantage of trading using opposite IA Clarington and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA Clarington 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 IA Clarington Loomis and iShares ESG 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.