Correlation Between IShares ESG and SEI Select

Can any of the company-specific risk be diversified away by investing in both IShares ESG and SEI Select 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 SEI Select 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 SEI Select Emerging, you can compare the effects of market volatilities on IShares ESG and SEI Select 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 SEI Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and SEI Select.

Diversification Opportunities for IShares ESG and SEI Select

1.0

Correlation Coefficient

IShares ESG  SEI Select

No risk reduction

The 3 months correlation between IShares and SEI is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and SEI Select Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Select Emerging 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 SEI Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Select Emerging has no effect on the direction of IShares ESG i.e., IShares ESG and SEI Select go up and down completely randomly.

Pair Corralation between IShares ESG and SEI Select

Given the investment horizon of 90 days IShares ESG is expected to generate 1.04 times less return on investment than SEI Select. But when comparing it to its historical volatility, iShares ESG Aware is 1.03 times less risky than SEI Select. It trades about 0.18 of its potential returns per unit of risk. SEI Select Emerging is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,523  in SEI Select Emerging on May 6, 2025 and sell it today you would earn a total of  239.58  from holding SEI Select Emerging or generate 9.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

iShares ESG Aware  vs.  SEI Select Emerging

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 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, IShares ESG may actually be approaching a critical reversion point that can send shares even higher in September 2025.

SEI Select Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Select Emerging are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, SEI Select may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with IShares ESG and SEI Select

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

The idea behind iShares ESG Aware and SEI Select Emerging 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.