Correlation Between IShares Gold and FlexShares ESG

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

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

Diversification Opportunities for IShares Gold and FlexShares ESG

-0.76

Correlation Coefficient

IShares Gold  FlexShares ESG

Pay attention - limited upside

The 3 months correlation between IShares and FlexShares is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares Gold Trust and FlexShares ESG Climate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares ESG Climate and IShares Gold 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 Gold Trust are associated (or correlated) with FlexShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares ESG Climate has no effect on the direction of IShares Gold i.e., IShares Gold and FlexShares ESG go up and down completely randomly.

Pair Corralation between IShares Gold and FlexShares ESG

Considering the 90-day investment horizon iShares Gold Trust is expected to generate 0.66 times more return on investment than FlexShares ESG. However, iShares Gold Trust is 1.52 times less risky than FlexShares ESG. It trades about 0.18 of its potential returns per unit of risk. FlexShares ESG Climate is currently generating about -0.05 per unit of risk. If you would invest  5,317  in iShares Gold Trust on February 3, 2025 and sell it today you would earn a total of  780.00  from holding iShares Gold Trust or generate 14.67% return on investment over 90 days.

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

iShares Gold Trust  vs.  FlexShares ESG Climate

iShares Gold Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Gold Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, IShares Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

FlexShares ESG Climate

Risk-Adjusted Performance

Very Weak

Over the last 90 days FlexShares ESG Climate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with IShares Gold and FlexShares ESG

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

The idea behind iShares Gold Trust and FlexShares ESG Climate 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.