Correlation Between ACE NASDAQ100 and ACE KRX
Can any of the company-specific risk be diversified away by investing in both ACE NASDAQ100 and ACE KRX 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 ACE NASDAQ100 and ACE KRX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACE NASDAQ100 3070 and ACE KRX Physical, you can compare the effects of market volatilities on ACE NASDAQ100 and ACE KRX 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 ACE NASDAQ100 with a short position of ACE KRX. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACE NASDAQ100 and ACE KRX.
Diversification Opportunities for ACE NASDAQ100 and ACE KRX
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ACE and ACE is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ACE NASDAQ100 3070 and ACE KRX Physical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACE KRX Physical and ACE NASDAQ100 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 ACE NASDAQ100 3070 are associated (or correlated) with ACE KRX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACE KRX Physical has no effect on the direction of ACE NASDAQ100 i.e., ACE NASDAQ100 and ACE KRX go up and down completely randomly.
Pair Corralation between ACE NASDAQ100 and ACE KRX
Assuming the 90 days trading horizon ACE NASDAQ100 is expected to generate 1.14 times less return on investment than ACE KRX. But when comparing it to its historical volatility, ACE NASDAQ100 3070 is 2.05 times less risky than ACE KRX. It trades about 0.17 of its potential returns per unit of risk. ACE KRX Physical is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,559,000 in ACE KRX Physical on September 5, 2024 and sell it today you would earn a total of 144,500 from holding ACE KRX Physical or generate 9.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACE NASDAQ100 3070 vs. ACE KRX Physical
Performance |
| Timeline |
| ACE NASDAQ100 3070 |
| ACE KRX Physical |
ACE NASDAQ100 and ACE KRX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACE NASDAQ100 and ACE KRX
The main advantage of trading using opposite ACE NASDAQ100 and ACE KRX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACE NASDAQ100 position performs unexpectedly, ACE KRX 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 ACE KRX will offset losses from the drop in ACE KRX's long position.| ACE NASDAQ100 vs. ACE KRX Physical | ACE NASDAQ100 vs. ACE EV Value | ACE NASDAQ100 vs. ACE NVIDIA30 Blend | ACE NASDAQ100 vs. ACE 24 12 Term |
| ACE KRX vs. ACE NASDAQ100 3070 | ACE KRX vs. ACE EV Value | ACE KRX vs. ACE NVIDIA30 Blend | ACE KRX vs. ACE 24 12 Term |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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