Correlation Between JAPAN EX and Nasdaq
Can any of the company-specific risk be diversified away by investing in both JAPAN EX and 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 JAPAN EX and Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAPAN EX UNADR and Nasdaq Inc, you can compare the effects of market volatilities on JAPAN EX and 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 JAPAN EX with a short position of Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAPAN EX and Nasdaq.
Diversification Opportunities for JAPAN EX and Nasdaq
Significant diversification
The 3 months correlation between JAPAN and Nasdaq is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN EX UNADR and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc and JAPAN EX 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 JAPAN EX UNADR are associated (or correlated) with Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of JAPAN EX i.e., JAPAN EX and Nasdaq go up and down completely randomly.
Pair Corralation between JAPAN EX and Nasdaq
Assuming the 90 days trading horizon JAPAN EX UNADR is expected to generate 1.24 times more return on investment than Nasdaq. However, JAPAN EX is 1.24 times more volatile than Nasdaq Inc. It trades about 0.07 of its potential returns per unit of risk. Nasdaq Inc is currently generating about 0.06 per unit of risk. If you would invest 619.00 in JAPAN EX UNADR on November 2, 2024 and sell it today you would earn a total of 401.00 from holding JAPAN EX UNADR or generate 64.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
JAPAN EX UNADR vs. Nasdaq Inc
Performance |
| Timeline |
| JAPAN EX UNADR |
| Nasdaq Inc |
JAPAN EX and Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAPAN EX and Nasdaq
The main advantage of trading using opposite JAPAN EX and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN EX position performs unexpectedly, 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 Nasdaq will offset losses from the drop in Nasdaq's long position.| JAPAN EX vs. Inspire Medical Systems | JAPAN EX vs. Yanzhou Coal Mining | JAPAN EX vs. Advanced Medical Solutions | JAPAN EX vs. Avanos Medical |
| Nasdaq vs. Sumitomo Mitsui Construction | Nasdaq vs. Hyatt Hotels | Nasdaq vs. China Railway Construction | Nasdaq vs. Pebblebrook Hotel Trust |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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