Correlation Between IShares NASDAQ and Amundi MSCI
Can any of the company-specific risk be diversified away by investing in both IShares NASDAQ and Amundi 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 IShares NASDAQ and Amundi MSCI 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 Amundi MSCI Semiconductors, you can compare the effects of market volatilities on IShares NASDAQ and Amundi 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 IShares NASDAQ with a short position of Amundi MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares NASDAQ and Amundi MSCI.
Diversification Opportunities for IShares NASDAQ and Amundi MSCI
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Amundi is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares NASDAQ 100 and Amundi MSCI Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi MSCI Semicond 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 Amundi MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi MSCI Semicond has no effect on the direction of IShares NASDAQ i.e., IShares NASDAQ and Amundi MSCI go up and down completely randomly.
Pair Corralation between IShares NASDAQ and Amundi MSCI
Assuming the 90 days trading horizon IShares NASDAQ is expected to generate 2.06 times less return on investment than Amundi MSCI. But when comparing it to its historical volatility, iShares NASDAQ 100 is 2.04 times less risky than Amundi MSCI. It trades about 0.25 of its potential returns per unit of risk. Amundi MSCI Semiconductors is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 5,475 in Amundi MSCI Semiconductors on May 25, 2025 and sell it today you would earn a total of 1,323 from holding Amundi MSCI Semiconductors or generate 24.16% 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. Amundi MSCI Semiconductors
Performance |
| Timeline |
| iShares NASDAQ 100 |
| Amundi MSCI Semicond |
IShares NASDAQ and Amundi MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares NASDAQ and Amundi MSCI
The main advantage of trading using opposite IShares NASDAQ and Amundi MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares NASDAQ position performs unexpectedly, Amundi 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 Amundi MSCI will offset losses from the drop in Amundi MSCI's long position.The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against IShares NASDAQ as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. IShares NASDAQ's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, IShares NASDAQ's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to iShares NASDAQ 100.
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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