Correlation Between IShares Nasdaq and IShares Global
Can any of the company-specific risk be diversified away by investing in both IShares Nasdaq and IShares Global 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 Nasdaq and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Nasdaq Biotechnology and iShares Global Water, you can compare the effects of market volatilities on IShares Nasdaq and IShares Global 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 Nasdaq with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Nasdaq and IShares Global.
Diversification Opportunities for IShares Nasdaq and IShares Global
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding iShares Nasdaq Biotechnology and iShares Global Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Water and IShares Nasdaq 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 Nasdaq Biotechnology are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Water has no effect on the direction of IShares Nasdaq i.e., IShares Nasdaq and IShares Global go up and down completely randomly.
Pair Corralation between IShares Nasdaq and IShares Global
Assuming the 90 days trading horizon IShares Nasdaq is expected to generate 1.11 times less return on investment than IShares Global. In addition to that, IShares Nasdaq is 1.6 times more volatile than iShares Global Water. It trades about 0.06 of its total potential returns per unit of risk. iShares Global Water is currently generating about 0.11 per unit of volatility. If you would invest 456,084 in iShares Global Water on August 26, 2024 and sell it today you would earn a total of 94,266 from holding iShares Global Water or generate 20.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Nasdaq Biotechnology vs. iShares Global Water
Performance |
| Timeline |
| iShares Nasdaq Biote |
| iShares Global Water |
IShares Nasdaq and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Nasdaq and IShares Global
The main advantage of trading using opposite IShares Nasdaq and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Nasdaq position performs unexpectedly, IShares Global 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 Global will offset losses from the drop in IShares Global's long position.| IShares Nasdaq vs. Leverage Shares 3x | IShares Nasdaq vs. WisdomTree SP 500 | IShares Nasdaq vs. WisdomTree Silver 3x | IShares Nasdaq vs. Leverage Shares 3x |
| IShares Global vs. iShares MSCI Japan | IShares Global vs. iShares JP Morgan | IShares Global vs. iShares MSCI Europe | IShares Global vs. iShares Nasdaq Biotechnology |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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