Correlation Between Invesco NASDAQ and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Invesco NASDAQ and IShares ESG 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 Invesco NASDAQ and IShares ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco NASDAQ 100 and iShares ESG Advanced, you can compare the effects of market volatilities on Invesco NASDAQ and IShares ESG 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 Invesco NASDAQ with a short position of IShares ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco NASDAQ and IShares ESG.
Diversification Opportunities for Invesco NASDAQ and IShares ESG
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Invesco and IShares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Invesco NASDAQ 100 and iShares ESG Advanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Advanced and Invesco 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 Invesco NASDAQ 100 are associated (or correlated) with IShares ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Advanced has no effect on the direction of Invesco NASDAQ i.e., Invesco NASDAQ and IShares ESG go up and down completely randomly.
Pair Corralation between Invesco NASDAQ and IShares ESG
Given the investment horizon of 90 days Invesco NASDAQ 100 is expected to generate 1.18 times more return on investment than IShares ESG. However, Invesco NASDAQ is 1.18 times more volatile than iShares ESG Advanced. It trades about 0.14 of its potential returns per unit of risk. iShares ESG Advanced is currently generating about 0.16 per unit of risk. If you would invest 20,102 in Invesco NASDAQ 100 on August 24, 2024 and sell it today you would earn a total of 686.00 from holding Invesco NASDAQ 100 or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco NASDAQ 100 vs. iShares ESG Advanced
Performance |
| Timeline |
| Invesco NASDAQ 100 |
| iShares ESG Advanced |
Invesco NASDAQ and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco NASDAQ and IShares ESG
The main advantage of trading using opposite Invesco NASDAQ and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco NASDAQ position performs unexpectedly, IShares ESG 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 ESG will offset losses from the drop in IShares ESG's long position.| Invesco NASDAQ vs. Invesco NASDAQ Next | Invesco NASDAQ vs. SPDR Portfolio SP | Invesco NASDAQ vs. SPDR Portfolio SP | Invesco NASDAQ vs. Schwab Dividend Equity |
| IShares ESG vs. iShares ESG Advanced | IShares ESG vs. iShares ESG MSCI | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG USD |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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