Correlation Between IShares Global and WisdomTree NASDAQ
Can any of the company-specific risk be diversified away by investing in both IShares Global and WisdomTree 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 IShares Global and WisdomTree NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Global Corp and WisdomTree NASDAQ 100, you can compare the effects of market volatilities on IShares Global and WisdomTree 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 IShares Global with a short position of WisdomTree NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Global and WisdomTree NASDAQ.
Diversification Opportunities for IShares Global and WisdomTree NASDAQ
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and WisdomTree is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Corp and WisdomTree NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree NASDAQ 100 and IShares Global 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 Global Corp are associated (or correlated) with WisdomTree NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree NASDAQ 100 has no effect on the direction of IShares Global i.e., IShares Global and WisdomTree NASDAQ go up and down completely randomly.
Pair Corralation between IShares Global and WisdomTree NASDAQ
Assuming the 90 days trading horizon iShares Global Corp is expected to under-perform the WisdomTree NASDAQ. But the etf apears to be less risky and, when comparing its historical volatility, iShares Global Corp is 9.52 times less risky than WisdomTree NASDAQ. The etf trades about -0.03 of its potential returns per unit of risk. The WisdomTree NASDAQ 100 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 22,736 in WisdomTree NASDAQ 100 on August 27, 2024 and sell it today you would earn a total of 1,127 from holding WisdomTree NASDAQ 100 or generate 4.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
iShares Global Corp vs. WisdomTree NASDAQ 100
Performance |
Timeline |
iShares Global Corp |
WisdomTree NASDAQ 100 |
IShares Global and WisdomTree NASDAQ Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Global and WisdomTree NASDAQ
The main advantage of trading using opposite IShares Global and WisdomTree NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global position performs unexpectedly, WisdomTree 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 WisdomTree NASDAQ will offset losses from the drop in WisdomTree NASDAQ's long position.IShares Global vs. iShares MSCI Japan | IShares Global vs. iShares JP Morgan | IShares Global vs. iShares MSCI Europe | IShares Global vs. iShares Nasdaq Biotechnology |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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