Correlation Between Nasdaq and IShares European
Can any of the company-specific risk be diversified away by investing in both Nasdaq and IShares European 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 IShares European into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and iShares European Property, you can compare the effects of market volatilities on Nasdaq and IShares European 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 IShares European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and IShares European.
Diversification Opportunities for Nasdaq and IShares European
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nasdaq and IShares is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and iShares European Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares European Property 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 IShares European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares European Property has no effect on the direction of Nasdaq i.e., Nasdaq and IShares European go up and down completely randomly.
Pair Corralation between Nasdaq and IShares European
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 1.05 times more return on investment than IShares European. However, Nasdaq is 1.05 times more volatile than iShares European Property. It trades about 0.17 of its potential returns per unit of risk. iShares European Property is currently generating about -0.01 per unit of risk. If you would invest 6,043 in Nasdaq Inc on October 7, 2024 and sell it today you would earn a total of 1,779 from holding Nasdaq Inc or generate 29.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
Nasdaq Inc vs. iShares European Property
Performance |
| Timeline |
| Nasdaq Inc |
| iShares European Property |
Nasdaq and IShares European Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and IShares European
The main advantage of trading using opposite Nasdaq and IShares European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, IShares European 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 European will offset losses from the drop in IShares European's long position.The idea behind Nasdaq Inc and iShares European Property 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.| IShares European vs. iShares Corp Bond | IShares European vs. iShares Emerging Asia | IShares European vs. iShares MSCI Global | IShares European vs. iShares Asia Property |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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