Correlation Between Strategy Shares and IShares ESG

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

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

Diversification Opportunities for Strategy Shares and IShares ESG

0.93

Correlation Coefficient

Strategy Shares  IShares ESG

Almost no diversification

The 3 months correlation between Strategy and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Strategy Shares NewfoundReSolv and iShares ESG Aware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aware and Strategy Shares 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 Strategy Shares NewfoundReSolve 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 Aware has no effect on the direction of Strategy Shares i.e., Strategy Shares and IShares ESG go up and down completely randomly.

Pair Corralation between Strategy Shares and IShares ESG

Given the investment horizon of 90 days Strategy Shares NewfoundReSolve is expected to generate 1.21 times more return on investment than IShares ESG. However, Strategy Shares is 1.21 times more volatile than iShares ESG Aware. It trades about 0.19 of its potential returns per unit of risk. iShares ESG Aware is currently generating about 0.15 per unit of risk. If you would invest  3,024  in Strategy Shares NewfoundReSolve on September 3, 2024 and sell it today you would earn a total of  241.00  from holding Strategy Shares NewfoundReSolve or generate 7.97% return on investment over 90 days.

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

Strategy Shares NewfoundReSolv  vs.  iShares ESG Aware

Strategy Shares Newf

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strategy Shares NewfoundReSolve are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Strategy Shares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares ESG Aware

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Aware are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. 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 Strategy Shares and IShares ESG

The main advantage of trading using opposite Strategy Shares and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategy Shares 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 Strategy Shares NewfoundReSolve and iShares ESG Aware 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.