Correlation Between Dynamic Active and IShares NASDAQ
Can any of the company-specific risk be diversified away by investing in both Dynamic Active and IShares 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 Dynamic Active and IShares NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynamic Active Dividend and iShares NASDAQ 100, you can compare the effects of market volatilities on Dynamic Active and IShares 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 Dynamic Active with a short position of IShares NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynamic Active and IShares NASDAQ.
Diversification Opportunities for Dynamic Active and IShares NASDAQ
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dynamic and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Active Dividend and iShares NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares NASDAQ 100 and Dynamic Active 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 Dynamic Active Dividend are associated (or correlated) with IShares NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares NASDAQ 100 has no effect on the direction of Dynamic Active i.e., Dynamic Active and IShares NASDAQ go up and down completely randomly.
Pair Corralation between Dynamic Active and IShares NASDAQ
Assuming the 90 days trading horizon Dynamic Active Dividend is expected to generate 0.99 times more return on investment than IShares NASDAQ. However, Dynamic Active Dividend is 1.01 times less risky than IShares NASDAQ. It trades about 0.12 of its potential returns per unit of risk. iShares NASDAQ 100 is currently generating about 0.1 per unit of risk. If you would invest 4,320 in Dynamic Active Dividend on September 12, 2024 and sell it today you would earn a total of 2,147 from holding Dynamic Active Dividend or generate 49.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dynamic Active Dividend vs. iShares NASDAQ 100
Performance |
| Timeline |
| Dynamic Active Dividend |
| iShares NASDAQ 100 |
Dynamic Active and IShares NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynamic Active and IShares NASDAQ
The main advantage of trading using opposite Dynamic Active and IShares NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynamic Active position performs unexpectedly, IShares 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 IShares NASDAQ will offset losses from the drop in IShares NASDAQ's long position.| Dynamic Active vs. Dynamic Active Global | Dynamic Active vs. Dynamic Active Canadian | Dynamic Active vs. Dynamic Active Preferred | Dynamic Active vs. Dynamic Active Global |
| IShares NASDAQ vs. iShares Core SP | IShares NASDAQ vs. iShares SPTSX Capped | IShares NASDAQ vs. BMO NASDAQ 100 | IShares NASDAQ vs. Vanguard SP 500 |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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