Correlation Between IShares NASDAQ and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both IShares NASDAQ and IShares MSCI 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 MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares NASDAQ 100 and iShares MSCI China, you can compare the effects of market volatilities on IShares NASDAQ and IShares MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares NASDAQ and IShares MSCI.
Diversification Opportunities for IShares NASDAQ and IShares MSCI
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and IShares is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding iShares NASDAQ 100 and iShares MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI China 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 100 are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI China has no effect on the direction of IShares NASDAQ i.e., IShares NASDAQ and IShares MSCI go up and down completely randomly.
Pair Corralation between IShares NASDAQ and IShares MSCI
Assuming the 90 days trading horizon iShares NASDAQ 100 is expected to generate 0.6 times more return on investment than IShares MSCI. However, iShares NASDAQ 100 is 1.66 times less risky than IShares MSCI. It trades about 0.29 of its potential returns per unit of risk. iShares MSCI China is currently generating about -0.08 per unit of risk. If you would invest 105,020 in iShares NASDAQ 100 on September 1, 2024 and sell it today you would earn a total of 8,320 from holding iShares NASDAQ 100 or generate 7.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares NASDAQ 100 vs. iShares MSCI China
Performance |
| Timeline |
| iShares NASDAQ 100 |
| iShares MSCI China |
IShares NASDAQ and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares NASDAQ and IShares MSCI
The main advantage of trading using opposite IShares NASDAQ and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares NASDAQ position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.| IShares NASDAQ vs. iShares Core MSCI | IShares NASDAQ vs. BlackRock ESG Multi Asset | IShares NASDAQ vs. Pershing Square Holdings | IShares NASDAQ vs. ASML Holding NV |
| IShares MSCI vs. iShares Core MSCI | IShares MSCI vs. iShares Core MSCI | IShares MSCI vs. iShares Core MSCI | IShares MSCI vs. iShares NASDAQ 100 |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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