Correlation Between IShares ESG and Fm 3

Can any of the company-specific risk be diversified away by investing in both IShares ESG and Fm 3 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 IShares ESG and Fm 3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares ESG 1 5 and Fm 3 Year Investment, you can compare the effects of market volatilities on IShares ESG and Fm 3 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 IShares ESG with a short position of Fm 3. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Fm 3.

Diversification Opportunities for IShares ESG and Fm 3

0.98

Correlation Coefficient

IShares ESG  Fm 3

Almost no diversification

The 3 months correlation between IShares and ZTRE is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG 1 5 and Fm 3 Year Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fm 3 Year and IShares 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 iShares ESG 1 5 are associated (or correlated) with Fm 3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fm 3 Year has no effect on the direction of IShares ESG i.e., IShares ESG and Fm 3 go up and down completely randomly.

Pair Corralation between IShares ESG and Fm 3

Given the investment horizon of 90 days iShares ESG 1 5 is expected to generate 1.04 times more return on investment than Fm 3. However, IShares ESG is 1.04 times more volatile than Fm 3 Year Investment. It trades about 0.25 of its potential returns per unit of risk. Fm 3 Year Investment is currently generating about 0.22 per unit of risk. If you would invest  2,452  in iShares ESG 1 5 on December 28, 2024 and sell it today you would earn a total of  46.00  from holding iShares ESG 1 5 or generate 1.88% return on investment over 90 days.

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

iShares ESG 1 5  vs.  Fm 3 Year Investment

iShares ESG 1

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG 1 5 are ranked lower than 19 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Fm 3 Year

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fm 3 Year Investment are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Fm 3 is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares ESG and Fm 3

The main advantage of trading using opposite IShares ESG and Fm 3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, Fm 3 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 Fm 3 will offset losses from the drop in Fm 3's long position.

The idea behind iShares ESG 1 5 and Fm 3 Year Investment 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.