Correlation Between Nasdaq and ISharesGlobal 100
Can any of the company-specific risk be diversified away by investing in both Nasdaq and ISharesGlobal 100 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 Nasdaq and ISharesGlobal 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and iSharesGlobal 100, you can compare the effects of market volatilities on Nasdaq and ISharesGlobal 100 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 Nasdaq with a short position of ISharesGlobal 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and ISharesGlobal 100.
Diversification Opportunities for Nasdaq and ISharesGlobal 100
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq and ISharesGlobal is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and iSharesGlobal 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSharesGlobal 100 and Nasdaq 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 Nasdaq Inc are associated (or correlated) with ISharesGlobal 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSharesGlobal 100 has no effect on the direction of Nasdaq i.e., Nasdaq and ISharesGlobal 100 go up and down completely randomly.
Pair Corralation between Nasdaq and ISharesGlobal 100
Given the investment horizon of 90 days Nasdaq is expected to generate 1.83 times less return on investment than ISharesGlobal 100. In addition to that, Nasdaq is 1.92 times more volatile than iSharesGlobal 100. It trades about 0.05 of its total potential returns per unit of risk. iSharesGlobal 100 is currently generating about 0.16 per unit of volatility. If you would invest 9,148 in iSharesGlobal 100 on September 24, 2024 and sell it today you would earn a total of 6,787 from holding iSharesGlobal 100 or generate 74.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Nasdaq Inc vs. iSharesGlobal 100
Performance |
| Timeline |
| Nasdaq Inc |
| iSharesGlobal 100 |
Nasdaq and ISharesGlobal 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and ISharesGlobal 100
The main advantage of trading using opposite Nasdaq and ISharesGlobal 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, ISharesGlobal 100 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 ISharesGlobal 100 will offset losses from the drop in ISharesGlobal 100's long position.The idea behind Nasdaq Inc and iSharesGlobal 100 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ISharesGlobal 100 vs. iShares MSCI Emerging | ISharesGlobal 100 vs. Global X Hydrogen | ISharesGlobal 100 vs. Janus Henderson Sustainable | ISharesGlobal 100 vs. JPMorgan Equity Premium |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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