Correlation Between Pershing Square and IShares NASDAQ
Can any of the company-specific risk be diversified away by investing in both Pershing Square 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 Pershing Square and IShares NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pershing Square Holdings and iShares NASDAQ 100, you can compare the effects of market volatilities on Pershing Square 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 Pershing Square with a short position of IShares NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pershing Square and IShares NASDAQ.
Diversification Opportunities for Pershing Square and IShares NASDAQ
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pershing and IShares is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pershing Square Holdings and iShares NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares NASDAQ 100 and Pershing Square 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 Pershing Square Holdings 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 Pershing Square i.e., Pershing Square and IShares NASDAQ go up and down completely randomly.
Pair Corralation between Pershing Square and IShares NASDAQ
Assuming the 90 days trading horizon Pershing Square Holdings is expected to generate 0.93 times more return on investment than IShares NASDAQ. However, Pershing Square Holdings is 1.08 times less risky than IShares NASDAQ. It trades about 0.31 of its potential returns per unit of risk. iShares NASDAQ 100 is currently generating about 0.29 per unit of risk. If you would invest 4,446 in Pershing Square Holdings on September 1, 2024 and sell it today you would earn a total of 344.00 from holding Pershing Square Holdings or generate 7.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pershing Square Holdings vs. iShares NASDAQ 100
Performance |
| Timeline |
| Pershing Square Holdings |
| iShares NASDAQ 100 |
Pershing Square and IShares NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pershing Square and IShares NASDAQ
The main advantage of trading using opposite Pershing Square and IShares NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pershing Square 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.| Pershing Square vs. Pershing Square Holdings | Pershing Square vs. Universal Music Group | Pershing Square vs. Hydratec Industries NV | Pershing Square vs. BlackRock ESG Multi Asset |
| IShares NASDAQ vs. iShares Core MSCI | IShares NASDAQ vs. BlackRock ESG Multi Asset | IShares NASDAQ vs. Pershing Square Holdings | IShares NASDAQ vs. ASML Holding NV |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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