Correlation Between IShares NASDAQ and IShares VII
Can any of the company-specific risk be diversified away by investing in both IShares NASDAQ and IShares VII 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 VII 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 VII PLC, you can compare the effects of market volatilities on IShares NASDAQ and IShares VII 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 VII. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares NASDAQ and IShares VII.
Diversification Opportunities for IShares NASDAQ and IShares VII
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding iShares NASDAQ 100 and iShares VII PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares VII PLC 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 VII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares VII PLC has no effect on the direction of IShares NASDAQ i.e., IShares NASDAQ and IShares VII go up and down completely randomly.
Pair Corralation between IShares NASDAQ and IShares VII
Assuming the 90 days trading horizon iShares NASDAQ 100 is expected to generate 1.62 times more return on investment than IShares VII. However, IShares NASDAQ is 1.62 times more volatile than iShares VII PLC. It trades about 0.11 of its potential returns per unit of risk. iShares VII PLC is currently generating about 0.05 per unit of risk. If you would invest 68,000 in iShares NASDAQ 100 on September 3, 2024 and sell it today you would earn a total of 51,700 from holding iShares NASDAQ 100 or generate 76.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
iShares NASDAQ 100 vs. iShares VII PLC
Performance |
| Timeline |
| iShares NASDAQ 100 |
| iShares VII PLC |
IShares NASDAQ and IShares VII Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares NASDAQ and IShares VII
The main advantage of trading using opposite IShares NASDAQ and IShares VII positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares NASDAQ position performs unexpectedly, IShares VII 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 VII will offset losses from the drop in IShares VII's long position.The idea behind iShares NASDAQ 100 and iShares VII PLC 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.| IShares VII vs. UBSFund Solutions MSCI | IShares VII vs. Vanguard SP 500 | IShares VII vs. iShares VII PLC | IShares VII vs. iShares Core SP |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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