Correlation Between IShares Select and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both IShares Select and Nasdaq 100 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 Select and Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Select Dividend and Nasdaq 100, you can compare the effects of market volatilities on IShares Select and Nasdaq 100 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 Select with a short position of Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Select and Nasdaq 100.
Diversification Opportunities for IShares Select and Nasdaq 100
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Nasdaq is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding iShares Select Dividend and Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 and IShares Select 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 Select Dividend are associated (or correlated) with Nasdaq 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 has no effect on the direction of IShares Select i.e., IShares Select and Nasdaq 100 go up and down completely randomly.
Pair Corralation between IShares Select and Nasdaq 100
Considering the 90-day investment horizon iShares Select Dividend is expected to generate 0.74 times more return on investment than Nasdaq 100. However, iShares Select Dividend is 1.36 times less risky than Nasdaq 100. It trades about 0.15 of its potential returns per unit of risk. Nasdaq 100 is currently generating about 0.11 per unit of risk. If you would invest 10,421 in iShares Select Dividend on September 1, 2024 and sell it today you would earn a total of 3,920 from holding iShares Select Dividend or generate 37.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.77% |
| Values | Daily Returns |
iShares Select Dividend vs. Nasdaq 100
Performance |
| Timeline |
| iShares Select Dividend |
| Nasdaq 100 |
IShares Select and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Select and Nasdaq 100
The main advantage of trading using opposite IShares Select and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Select position performs unexpectedly, Nasdaq 100 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 Nasdaq 100 will offset losses from the drop in Nasdaq 100's long position.| IShares Select vs. SPDR SP Dividend | IShares Select vs. Vanguard Dividend Appreciation | IShares Select vs. iShares Core High | IShares Select vs. iShares Preferred and |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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