Correlation Between IShares ESG and Ether Fund

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

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

Diversification Opportunities for IShares ESG and Ether Fund

0.34

Correlation Coefficient

IShares ESG  Ether Fund

Weak diversification

The 3 months correlation between IShares and Ether is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and Ether Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ether Fund 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 Aware are associated (or correlated) with Ether Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ether Fund has no effect on the direction of IShares ESG i.e., IShares ESG and Ether Fund go up and down completely randomly.

Pair Corralation between IShares ESG and Ether Fund

Assuming the 90 days trading horizon iShares ESG Aware is expected to generate 0.18 times more return on investment than Ether Fund. However, iShares ESG Aware is 5.51 times less risky than Ether Fund. It trades about 0.01 of its potential returns per unit of risk. Ether Fund is currently generating about -0.18 per unit of risk. If you would invest  2,999  in iShares ESG Aware on December 29, 2024 and sell it today you would earn a total of  14.00  from holding iShares ESG Aware or generate 0.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

iShares ESG Aware  vs.  Ether Fund

iShares ESG Aware

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Aware are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IShares ESG is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Ether Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ether Fund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's technical indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with IShares ESG and Ether Fund

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

The idea behind iShares ESG Aware and Ether Fund 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.