Correlation Between IShares NASDAQ and IShares VII

Can any of the company-specific risk be diversified away by investing in both IShares NASDAQ and IShares VII 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 VII 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 VII PLC, you can compare the effects of market volatilities on IShares NASDAQ and IShares VII 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 VII. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares NASDAQ and IShares VII.

Diversification Opportunities for IShares NASDAQ and IShares VII

0.95

Correlation Coefficient

IShares NASDAQ  IShares VII

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 VII PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares VII PLC 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 VII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares VII PLC has no effect on the direction of IShares NASDAQ i.e., IShares NASDAQ and IShares VII go up and down completely randomly.

Pair Corralation between IShares NASDAQ and IShares VII

Assuming the 90 days trading horizon iShares NASDAQ 100 is expected to generate 0.96 times more return on investment than IShares VII. However, iShares NASDAQ 100 is 1.04 times less risky than IShares VII. It trades about 0.26 of its potential returns per unit of risk. iShares VII PLC is currently generating about 0.2 per unit of risk. If you would invest  115,120  in iShares NASDAQ 100 on May 8, 2025 and sell it today you would earn a total of  16,800  from holding iShares NASDAQ 100 or generate 14.59% 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 VII PLC

iShares NASDAQ 100

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares NASDAQ 100 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, IShares NASDAQ unveiled solid returns over the last few months and may actually be approaching a breakup point.

iShares VII PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares VII PLC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, IShares VII may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with IShares NASDAQ and IShares VII

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

The idea behind iShares NASDAQ 100 and iShares VII PLC 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.