Correlation Between BlackRock ESG and IShares VII

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

Diversification Opportunities for BlackRock ESG and IShares VII

0.69

Correlation Coefficient

BlackRock ESG  IShares VII

Poor diversification

The 3 months correlation between BlackRock and IShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock ESG Multi Asset and iShares VII Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares VII Public 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 VII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares VII Public has no effect on the direction of BlackRock ESG i.e., BlackRock ESG and IShares VII go up and down completely randomly.

Pair Corralation between BlackRock ESG and IShares VII

Assuming the 90 days trading horizon BlackRock ESG is expected to generate 1.85 times less return on investment than IShares VII. But when comparing it to its historical volatility, BlackRock ESG Multi Asset is 2.57 times less risky than IShares VII. It trades about 0.11 of its potential returns per unit of risk. iShares VII Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  12,726  in iShares VII Public on November 19, 2024 and sell it today you would earn a total of  844.00  from holding iShares VII Public or generate 6.63% return on investment over 90 days.

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

BlackRock ESG Multi Asset  vs.  iShares VII Public

BlackRock ESG Multi

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock ESG Multi Asset are ranked lower than 8 (%) 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 VII Public

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares VII Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares VII may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with BlackRock ESG and IShares VII

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

The idea behind BlackRock ESG Multi Asset and iShares VII Public 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.