Correlation Between IShares ESG and BlackRock Future

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

By analyzing existing cross correlation between iShares ESG Advanced and BlackRock Future Health, you can compare the effects of market volatilities on IShares ESG and BlackRock Future 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 BlackRock Future. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and BlackRock Future.

Diversification Opportunities for IShares ESG and BlackRock Future

0.43

Correlation Coefficient

IShares ESG  BlackRock Future

Very weak diversification

The 3 months correlation between IShares and BlackRock is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Advanced and BlackRock Future Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Future Health 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 Advanced are associated (or correlated) with BlackRock Future. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Future Health has no effect on the direction of IShares ESG i.e., IShares ESG and BlackRock Future go up and down completely randomly.

Pair Corralation between IShares ESG and BlackRock Future

Given the investment horizon of 90 days iShares ESG Advanced is expected to under-perform the BlackRock Future. In addition to that, IShares ESG is 1.14 times more volatile than BlackRock Future Health. It trades about -0.1 of its total potential returns per unit of risk. BlackRock Future Health is currently generating about -0.05 per unit of volatility. If you would invest  2,590  in BlackRock Future Health on October 12, 2024 and sell it today you would lose (28.00) from holding BlackRock Future Health or give up 1.08% of portfolio value over 90 days.

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

iShares ESG Advanced  vs.  BlackRock Future Health

iShares ESG Advanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares ESG Advanced has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IShares ESG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BlackRock Future Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Future Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, BlackRock Future 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 BlackRock Future

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

The idea behind iShares ESG Advanced and BlackRock Future Health 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.