Correlation Between Absolute Core and IShares Nasdaq
Can any of the company-specific risk be diversified away by investing in both Absolute Core and IShares Nasdaq 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 Absolute Core and IShares Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Core Strategy and iShares Nasdaq Top, you can compare the effects of market volatilities on Absolute Core and IShares Nasdaq 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 Absolute Core with a short position of IShares Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Core and IShares Nasdaq.
Diversification Opportunities for Absolute Core and IShares Nasdaq
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Absolute and IShares is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Core Strategy and iShares Nasdaq Top in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Nasdaq Top and Absolute Core 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 Absolute Core Strategy are associated (or correlated) with IShares Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Nasdaq Top has no effect on the direction of Absolute Core i.e., Absolute Core and IShares Nasdaq go up and down completely randomly.
Pair Corralation between Absolute Core and IShares Nasdaq
Given the investment horizon of 90 days Absolute Core is expected to generate 2.94 times less return on investment than IShares Nasdaq. But when comparing it to its historical volatility, Absolute Core Strategy is 1.89 times less risky than IShares Nasdaq. It trades about 0.13 of its potential returns per unit of risk. iShares Nasdaq Top is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,486 in iShares Nasdaq Top on September 14, 2024 and sell it today you would earn a total of 189.00 from holding iShares Nasdaq Top or generate 7.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 28.8% |
| Values | Daily Returns |
Absolute Core Strategy vs. iShares Nasdaq Top
Performance |
| Timeline |
| Absolute Core Strategy |
| iShares Nasdaq Top |
Absolute Core and IShares Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Core and IShares Nasdaq
The main advantage of trading using opposite Absolute Core and IShares Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Core position performs unexpectedly, IShares Nasdaq 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 Nasdaq will offset losses from the drop in IShares Nasdaq's long position.| Absolute Core vs. Anfield Equity Sector | Absolute Core vs. AdvisorShares Dorsey Wright | Absolute Core vs. First Trust Active | Absolute Core vs. Aptus Collared Income |
| IShares Nasdaq vs. iShares Factors Growth | IShares Nasdaq vs. Absolute Core Strategy | IShares Nasdaq vs. iShares ESG Advanced | IShares Nasdaq vs. PIMCO RAFI Dynamic |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |