Correlation Between IShares China and BlackRock ESG

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

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

Diversification Opportunities for IShares China and BlackRock ESG

-0.78

Correlation Coefficient

IShares China  BlackRock ESG

Pay attention - limited upside

The 3 months correlation between IShares and BlackRock is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding iShares China CNY and BlackRock ESG Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock ESG Multi and IShares China 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 China CNY are associated (or correlated) with BlackRock ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock ESG Multi has no effect on the direction of IShares China i.e., IShares China and BlackRock ESG go up and down completely randomly.

Pair Corralation between IShares China and BlackRock ESG

Assuming the 90 days trading horizon iShares China CNY is expected to under-perform the BlackRock ESG. But the etf apears to be less risky and, when comparing its historical volatility, iShares China CNY is 1.28 times less risky than BlackRock ESG. The etf trades about -0.01 of its potential returns per unit of risk. The BlackRock ESG Multi Asset is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  570.00  in BlackRock ESG Multi Asset on September 12, 2024 and sell it today you would earn a total of  51.00  from holding BlackRock ESG Multi Asset or generate 8.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

iShares China CNY  vs.  BlackRock ESG Multi Asset

iShares China CNY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares China CNY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares China is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BlackRock ESG Multi

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock ESG Multi Asset are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BlackRock ESG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares China and BlackRock ESG

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

The idea behind iShares China CNY and BlackRock ESG Multi Asset 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.