Correlation Between FT Cboe and IShares ESG

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

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

Diversification Opportunities for FT Cboe and IShares ESG

0.56

Correlation Coefficient

FT Cboe  IShares ESG

Very weak diversification

The 3 months correlation between BUFD and IShares is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and iShares ESG Aware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aware and FT Cboe 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 FT Cboe Vest are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Aware has no effect on the direction of FT Cboe i.e., FT Cboe and IShares ESG go up and down completely randomly.

Pair Corralation between FT Cboe and IShares ESG

Given the investment horizon of 90 days FT Cboe is expected to generate 1.37 times less return on investment than IShares ESG. But when comparing it to its historical volatility, FT Cboe Vest is 2.39 times less risky than IShares ESG. It trades about 0.28 of its potential returns per unit of risk. iShares ESG Aware is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,819  in iShares ESG Aware on May 3, 2025 and sell it today you would earn a total of  383.00  from holding iShares ESG Aware or generate 10.03% return on investment over 90 days.

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

FT Cboe Vest  vs.  iShares ESG Aware

FT Cboe Vest

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, FT Cboe may actually be approaching a critical reversion point that can send shares even higher in September 2025.

iShares ESG Aware

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Aware are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady primary indicators, IShares ESG may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with FT Cboe and IShares ESG

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

The idea behind FT Cboe Vest and iShares ESG Aware 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.