Correlation Between IShares ESG and IShares Global
Can any of the company-specific risk be diversified away by investing in both IShares ESG and IShares Global 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 IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ESG MSCI and iShares Global REIT, you can compare the effects of market volatilities on IShares ESG and IShares Global 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 IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and IShares Global.
Diversification Opportunities for IShares ESG and IShares Global
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and IShares is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG MSCI and iShares Global REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global REIT 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 MSCI are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global REIT has no effect on the direction of IShares ESG i.e., IShares ESG and IShares Global go up and down completely randomly.
Pair Corralation between IShares ESG and IShares Global
Given the investment horizon of 90 days iShares ESG MSCI is expected to generate 0.71 times more return on investment than IShares Global. However, iShares ESG MSCI is 1.41 times less risky than IShares Global. It trades about -0.04 of its potential returns per unit of risk. iShares Global REIT is currently generating about -0.17 per unit of risk. If you would invest 2,853 in iShares ESG MSCI on September 23, 2024 and sell it today you would lose (53.00) from holding iShares ESG MSCI or give up 1.86% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
iShares ESG MSCI vs. iShares Global REIT
Performance |
Timeline |
iShares ESG MSCI |
iShares Global REIT |
IShares ESG and IShares Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares ESG and IShares Global
The main advantage of trading using opposite IShares ESG and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ESG position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.IShares ESG vs. Vanguard Total Stock | IShares ESG vs. SPDR SP 500 | IShares ESG vs. iShares Core SP | IShares ESG vs. Vanguard Dividend Appreciation |
IShares Global vs. iShares Environmental Infrastructure | IShares Global vs. iShares ESG MSCI | IShares Global vs. VanEck Green Infrastructure | IShares Global vs. First Trust Growth |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |