Correlation Between IShares Dividend and IShares ESG

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

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

Diversification Opportunities for IShares Dividend and IShares ESG

0.98

Correlation Coefficient

IShares Dividend  IShares ESG

Almost no diversification

The 3 months correlation between IShares and IShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Dividend and 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 IShares Dividend 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 Dividend and 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 IShares Dividend i.e., IShares Dividend and IShares ESG go up and down completely randomly.

Pair Corralation between IShares Dividend and IShares ESG

Given the investment horizon of 90 days IShares Dividend is expected to generate 1.76 times less return on investment than IShares ESG. But when comparing it to its historical volatility, iShares Dividend and is 1.02 times less risky than IShares ESG. It trades about 0.15 of its potential returns per unit of risk. iShares ESG Aware is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  12,221  in iShares ESG Aware on May 7, 2025 and sell it today you would earn a total of  1,587  from holding iShares ESG Aware or generate 12.99% return on investment over 90 days.

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

iShares Dividend and  vs.  iShares ESG Aware

iShares Dividend

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Dividend and are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, IShares Dividend may actually be approaching a critical reversion point that can send shares even higher in September 2025.

iShares ESG Aware

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Aware are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, IShares ESG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Dividend and IShares ESG

The main advantage of trading using opposite IShares Dividend and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Dividend 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 iShares Dividend and 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.