Correlation Between Nasdaq and ASX
Can any of the company-specific risk be diversified away by investing in both Nasdaq and ASX 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 Nasdaq and ASX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and ASX LTD UNSPONSADR, you can compare the effects of market volatilities on Nasdaq and ASX 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 Nasdaq with a short position of ASX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and ASX.
Diversification Opportunities for Nasdaq and ASX
Average diversification
The 3 months correlation between Nasdaq and ASX is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and ASX LTD UNSPONSADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASX LTD UNSPONSADR and 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 Nasdaq Inc are associated (or correlated) with ASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASX LTD UNSPONSADR has no effect on the direction of Nasdaq i.e., Nasdaq and ASX go up and down completely randomly.
Pair Corralation between Nasdaq and ASX
Assuming the 90 days horizon Nasdaq Inc is expected to generate 1.01 times more return on investment than ASX. However, Nasdaq is 1.01 times more volatile than ASX LTD UNSPONSADR. It trades about 0.06 of its potential returns per unit of risk. ASX LTD UNSPONSADR is currently generating about 0.0 per unit of risk. If you would invest 5,365 in Nasdaq Inc on November 2, 2024 and sell it today you would earn a total of 2,485 from holding Nasdaq Inc or generate 46.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq Inc vs. ASX LTD UNSPONSADR
Performance |
| Timeline |
| Nasdaq Inc |
| ASX LTD UNSPONSADR |
Nasdaq and ASX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and ASX
The main advantage of trading using opposite Nasdaq and ASX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, ASX 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 ASX will offset losses from the drop in ASX's long position.| Nasdaq vs. Sumitomo Mitsui Construction | Nasdaq vs. Hyatt Hotels | Nasdaq vs. China Railway Construction | Nasdaq vs. Pebblebrook Hotel Trust |
| ASX vs. Citic Telecom International | ASX vs. Chunghwa Telecom Co | ASX vs. TELECOM ITALIA | ASX vs. GREENX METALS LTD |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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