Correlation Between BlackRock ESG and IShares JP

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

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

Diversification Opportunities for BlackRock ESG and IShares JP

0.57

Correlation Coefficient

BlackRock ESG  IShares JP

Very weak diversification

The 3 months correlation between BlackRock and IShares is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock ESG Multi Asset and iShares JP Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares JP Morgan and BlackRock 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 BlackRock ESG Multi Asset are associated (or correlated) with IShares JP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares JP Morgan has no effect on the direction of BlackRock ESG i.e., BlackRock ESG and IShares JP go up and down completely randomly.

Pair Corralation between BlackRock ESG and IShares JP

Assuming the 90 days trading horizon BlackRock ESG Multi Asset is expected to generate 1.45 times more return on investment than IShares JP. However, BlackRock ESG is 1.45 times more volatile than iShares JP Morgan. It trades about 0.07 of its potential returns per unit of risk. iShares JP Morgan is currently generating about 0.1 per unit of risk. If you would invest  719.00  in BlackRock ESG Multi Asset on October 26, 2024 and sell it today you would earn a total of  12.00  from holding BlackRock ESG Multi Asset or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.62%
Values	Daily Returns

BlackRock ESG Multi Asset  vs.  iShares JP Morgan

BlackRock ESG Multi

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock ESG Multi Asset are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BlackRock ESG is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

iShares JP Morgan

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares JP Morgan are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares JP is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BlackRock ESG and IShares JP

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

The idea behind BlackRock ESG Multi Asset and iShares JP Morgan 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.