Correlation Between Nasdaq and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Nasdaq and IShares MSCI 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 MSCI 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 MSCI USA, you can compare the effects of market volatilities on Nasdaq and IShares MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and IShares MSCI.
Diversification Opportunities for Nasdaq and IShares MSCI
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of Nasdaq i.e., Nasdaq and IShares MSCI go up and down completely randomly.
Pair Corralation between Nasdaq and IShares MSCI
Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the IShares MSCI. In addition to that, Nasdaq is 1.58 times more volatile than iShares MSCI USA. It trades about -0.19 of its total potential returns per unit of risk. iShares MSCI USA is currently generating about 0.07 per unit of volatility. If you would invest 766.00 in iShares MSCI USA on September 22, 2024 and sell it today you would earn a total of 7.00 from holding iShares MSCI USA or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nasdaq Inc vs. iShares MSCI USA
Performance |
| Timeline |
| Nasdaq Inc |
| iShares MSCI USA |
Nasdaq and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and IShares MSCI
The main advantage of trading using opposite Nasdaq and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.The idea behind Nasdaq Inc and iShares MSCI USA 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 MSCI vs. Lyxor UCITS Japan | IShares MSCI vs. Lyxor UCITS Japan | IShares MSCI vs. Lyxor UCITS Stoxx | IShares MSCI vs. Amundi CAC 40 |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |