Correlation Between IShares Technology and Invesco NASDAQ
Can any of the company-specific risk be diversified away by investing in both IShares Technology and Invesco 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 Technology and Invesco NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Technology ETF and Invesco NASDAQ Internet, you can compare the effects of market volatilities on IShares Technology and Invesco 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 Technology with a short position of Invesco NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Technology and Invesco NASDAQ.
Diversification Opportunities for IShares Technology and Invesco NASDAQ
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Invesco is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding iShares Technology ETF and Invesco NASDAQ Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco NASDAQ Internet and IShares Technology 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 Technology ETF are associated (or correlated) with Invesco NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco NASDAQ Internet has no effect on the direction of IShares Technology i.e., IShares Technology and Invesco NASDAQ go up and down completely randomly.
Pair Corralation between IShares Technology and Invesco NASDAQ
Considering the 90-day investment horizon iShares Technology ETF is expected to generate 1.28 times more return on investment than Invesco NASDAQ. However, IShares Technology is 1.28 times more volatile than Invesco NASDAQ Internet. It trades about -0.01 of its potential returns per unit of risk. Invesco NASDAQ Internet is currently generating about -0.04 per unit of risk. If you would invest 15,713 in iShares Technology ETF on November 28, 2024 and sell it today you would lose (63.00) from holding iShares Technology ETF or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Technology ETF vs. Invesco NASDAQ Internet
Performance |
| Timeline |
| iShares Technology ETF |
| Invesco NASDAQ Internet |
IShares Technology and Invesco NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Technology and Invesco NASDAQ
The main advantage of trading using opposite IShares Technology and Invesco NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Technology position performs unexpectedly, Invesco 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 Invesco NASDAQ will offset losses from the drop in Invesco NASDAQ's long position.| IShares Technology vs. iShares Healthcare ETF | IShares Technology vs. iShares Financials ETF | IShares Technology vs. iShares Telecommunications ETF | IShares Technology vs. iShares Industrials ETF |
| Invesco NASDAQ vs. First Trust Dow | Invesco NASDAQ vs. First Trust NASDAQ 100 Technology | Invesco NASDAQ vs. Global X Social | Invesco NASDAQ vs. Invesco SP SmallCap |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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