Correlation Between Nasdaq-100(r) and Europac International
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Europac International 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-100(r) and Europac International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Europac International Value, you can compare the effects of market volatilities on Nasdaq-100(r) and Europac International 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-100(r) with a short position of Europac International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Europac International.
Diversification Opportunities for Nasdaq-100(r) and Europac International
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nasdaq-100(r) and Europac is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Europac International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europac International and Nasdaq-100(r) 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 100 2x Strategy are associated (or correlated) with Europac International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europac International has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Europac International go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Europac International
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 3.31 times more return on investment than Europac International. However, Nasdaq-100(r) is 3.31 times more volatile than Europac International Value. It trades about 0.1 of its potential returns per unit of risk. Europac International Value is currently generating about 0.06 per unit of risk. If you would invest 15,539 in Nasdaq 100 2x Strategy on August 30, 2024 and sell it today you would earn a total of 25,485 from holding Nasdaq 100 2x Strategy or generate 164.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Europac International Value
Performance |
| Timeline |
| Nasdaq 100 2x |
| Europac International |
Nasdaq-100(r) and Europac International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Europac International
The main advantage of trading using opposite Nasdaq-100(r) and Europac International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Europac International 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 Europac International will offset losses from the drop in Europac International's long position.| Nasdaq-100(r) vs. Sterling Capital Short | Nasdaq-100(r) vs. Jhancock Short Duration | Nasdaq-100(r) vs. Rbc Short Duration | Nasdaq-100(r) vs. Federated Short Intermediate Duration |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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