Correlation Between IShares Core and NuShares ETF
Can any of the company-specific risk be diversified away by investing in both IShares Core and NuShares ETF 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 Core and NuShares ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and NuShares ETF Trust, you can compare the effects of market volatilities on IShares Core and NuShares ETF 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 Core with a short position of NuShares ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and NuShares ETF.
Diversification Opportunities for IShares Core and NuShares ETF
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and NuShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and NuShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuShares ETF Trust and IShares Core 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 Core MSCI are associated (or correlated) with NuShares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuShares ETF Trust has no effect on the direction of IShares Core i.e., IShares Core and NuShares ETF go up and down completely randomly.
Pair Corralation between IShares Core and NuShares ETF
Given the investment horizon of 90 days iShares Core MSCI is expected to under-perform the NuShares ETF. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core MSCI is 1.16 times less risky than NuShares ETF. The etf trades about -0.08 of its potential returns per unit of risk. The NuShares ETF Trust is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 3,060 in NuShares ETF Trust on August 26, 2024 and sell it today you would lose (98.00) from holding NuShares ETF Trust or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. NuShares ETF Trust
Performance |
| Timeline |
| iShares Core MSCI |
| NuShares ETF Trust |
IShares Core and NuShares ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and NuShares ETF
The main advantage of trading using opposite IShares Core and NuShares ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, NuShares ETF 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 NuShares ETF will offset losses from the drop in NuShares ETF's long position.| IShares Core vs. Freedom Day Dividend | IShares Core vs. Davis Select International | IShares Core vs. iShares MSCI China | IShares Core vs. SmartETFs Dividend Builder |
| NuShares ETF vs. Invesco PureBeta MSCI | NuShares ETF vs. Aquagold International | NuShares ETF vs. Morningstar Unconstrained Allocation | NuShares ETF vs. High Yield Municipal Fund |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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