Correlation Between IShares Core and IShares NASDAQ
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 IShares Core and IShares NASDAQ 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 iShares NASDAQ 100, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of IShares NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and IShares NASDAQ.
Diversification Opportunities for IShares Core and IShares NASDAQ
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI 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 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 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 IShares Core i.e., IShares Core and IShares NASDAQ go up and down completely randomly.
Pair Corralation between IShares Core and IShares NASDAQ
Assuming the 90 days trading horizon iShares Core MSCI is expected to under-perform the IShares NASDAQ. But the etf apears to be less risky and, when comparing its historical volatility, iShares Core MSCI is 1.45 times less risky than IShares NASDAQ. The etf trades about -0.1 of its potential returns per unit of risk. The iShares NASDAQ 100 is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 102,460 in iShares NASDAQ 100 on August 27, 2024 and sell it today you would earn a total of 11,300 from holding iShares NASDAQ 100 or generate 11.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. iShares NASDAQ 100
Performance |
| Timeline |
| iShares Core MSCI |
| iShares NASDAQ 100 |
IShares Core and IShares NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and IShares NASDAQ
The main advantage of trading using opposite IShares Core and IShares NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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.| IShares Core vs. SPDR Dow Jones | IShares Core vs. iShares SP 500 | IShares Core vs. iShares China CNY | IShares Core vs. iShares MSCI EM |
| IShares NASDAQ vs. iShares III Public | IShares NASDAQ vs. iShares Core MSCI | IShares NASDAQ vs. iShares France Govt | IShares NASDAQ vs. iShares Edge MSCI |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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