Correlation Between Evolve Global and IShares ESG

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

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

Diversification Opportunities for Evolve Global and IShares ESG

-0.82

Correlation Coefficient

Evolve Global  IShares ESG

Pay attention - limited upside

The 3 months correlation between Evolve and IShares is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Global Healthcare and iShares ESG Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Equity and Evolve Global 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 Evolve Global Healthcare 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 Equity has no effect on the direction of Evolve Global i.e., Evolve Global and IShares ESG go up and down completely randomly.

Pair Corralation between Evolve Global and IShares ESG

Assuming the 90 days trading horizon Evolve Global Healthcare is expected to under-perform the IShares ESG. But the etf apears to be less risky and, when comparing its historical volatility, Evolve Global Healthcare is 1.01 times less risky than IShares ESG. The etf trades about -0.22 of its potential returns per unit of risk. The iShares ESG Equity is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  6,028  in iShares ESG Equity on September 12, 2024 and sell it today you would earn a total of  607.00  from holding iShares ESG Equity or generate 10.07% return on investment over 90 days.

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

Evolve Global Healthcare  vs.  iShares ESG Equity

Evolve Global Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolve Global Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

iShares ESG Equity

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Equity are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, IShares ESG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Evolve Global and IShares ESG

The main advantage of trading using opposite Evolve Global and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolve Global 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 Evolve Global Healthcare and iShares ESG Equity 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.