Correlation Between IShares NASDAQ and IShares Core
Can any of the company-specific risk be diversified away by investing in both IShares NASDAQ and IShares Core 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 IShares NASDAQ and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares NASDAQ 100 and iShares Core SP, you can compare the effects of market volatilities on IShares NASDAQ and IShares Core 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 IShares NASDAQ with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares NASDAQ and IShares Core.
Diversification Opportunities for IShares NASDAQ and IShares Core
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding iShares NASDAQ 100 and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP and IShares 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 iShares NASDAQ 100 are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of IShares NASDAQ i.e., IShares NASDAQ and IShares Core go up and down completely randomly.
Pair Corralation between IShares NASDAQ and IShares Core
Assuming the 90 days trading horizon IShares NASDAQ is expected to generate 1.44 times less return on investment than IShares Core. In addition to that, IShares NASDAQ is 1.48 times more volatile than iShares Core SP. It trades about 0.08 of its total potential returns per unit of risk. iShares Core SP is currently generating about 0.17 per unit of volatility. If you would invest 5,282 in iShares Core SP on August 31, 2024 and sell it today you would earn a total of 1,011 from holding iShares Core SP or generate 19.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares NASDAQ 100 vs. iShares Core SP
Performance |
| Timeline |
| iShares NASDAQ 100 |
| iShares Core SP |
IShares NASDAQ and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares NASDAQ and IShares Core
The main advantage of trading using opposite IShares NASDAQ and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares NASDAQ position performs unexpectedly, IShares Core 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 Core will offset losses from the drop in IShares Core's long position.| IShares NASDAQ vs. BMO SP 500 | IShares NASDAQ vs. Vanguard SP 500 | IShares NASDAQ vs. Global X SP | IShares NASDAQ vs. iShares Core SP |
| IShares Core vs. Vanguard FTSE Canada | IShares Core vs. iShares Core MSCI | IShares Core vs. iShares Core MSCI | IShares Core vs. Vanguard Total Market |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |