Correlation Between IShares Russell and IShares Nasdaq
Can any of the company-specific risk be diversified away by investing in both IShares Russell 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 Russell 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 Russell 1000 and iShares Nasdaq 100 ex, you can compare the effects of market volatilities on IShares Russell 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 Russell with a short position of IShares Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and IShares Nasdaq.
Diversification Opportunities for IShares Russell and IShares Nasdaq
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and IShares is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 1000 and iShares Nasdaq 100 ex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Nasdaq 100 and IShares Russell 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 Russell 1000 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 Russell i.e., IShares Russell and IShares Nasdaq go up and down completely randomly.
Pair Corralation between IShares Russell and IShares Nasdaq
Considering the 90-day investment horizon IShares Russell is expected to generate 1.23 times less return on investment than IShares Nasdaq. In addition to that, IShares Russell is 1.05 times more volatile than iShares Nasdaq 100 ex. It trades about 0.09 of its total potential returns per unit of risk. iShares Nasdaq 100 ex is currently generating about 0.12 per unit of volatility. If you would invest 2,511 in iShares Nasdaq 100 ex on August 30, 2024 and sell it today you would earn a total of 69.00 from holding iShares Nasdaq 100 ex or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Russell 1000 vs. iShares Nasdaq 100 ex
Performance |
| Timeline |
| iShares Russell 1000 |
| iShares Nasdaq 100 |
IShares Russell and IShares Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Russell and IShares Nasdaq
The main advantage of trading using opposite IShares Russell and IShares Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell 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 Russell vs. iShares Russell 1000 | IShares Russell vs. iShares Russell 2000 | IShares Russell vs. iShares Russell 2000 | IShares Russell vs. iShares Russell 1000 |
| IShares Nasdaq vs. Freedom Day Dividend | IShares Nasdaq vs. Franklin Templeton ETF | IShares Nasdaq vs. iShares MSCI China | IShares Nasdaq vs. Tidal Trust II |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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