Correlation Between IShares Factors and Invesco NASDAQ

Can any of the company-specific risk be diversified away by investing in both IShares Factors and Invesco 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 IShares Factors and Invesco NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Factors Growth and Invesco NASDAQ 100, you can compare the effects of market volatilities on IShares Factors and Invesco 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 IShares Factors with a short position of Invesco NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Factors and Invesco NASDAQ.

Diversification Opportunities for IShares Factors and Invesco NASDAQ

0.0

Correlation Coefficient

IShares Factors  Invesco NASDAQ

Pay attention - limited upside

The 3 months correlation between IShares and Invesco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Factors Growth and Invesco NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco NASDAQ 100 and IShares Factors 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 Factors Growth are associated (or correlated) with Invesco NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco NASDAQ 100 has no effect on the direction of IShares Factors i.e., IShares Factors and Invesco NASDAQ go up and down completely randomly.

Pair Corralation between IShares Factors and Invesco NASDAQ

If you would invest (100.00) in iShares Factors Growth on December 4, 2024 and sell it today you would earn a total of  100.00  from holding iShares Factors Growth or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

iShares Factors Growth  vs.  Invesco NASDAQ 100

iShares Factors Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Factors Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, IShares Factors is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Invesco NASDAQ 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco NASDAQ 100 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Invesco NASDAQ is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Factors and Invesco NASDAQ

The main advantage of trading using opposite IShares Factors and Invesco NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Factors position performs unexpectedly, Invesco 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 Invesco NASDAQ will offset losses from the drop in Invesco NASDAQ's long position.

The idea behind iShares Factors Growth and Invesco NASDAQ 100 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.