Correlation Between Nasdaq 100 and Mondrian Emerging
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Mondrian Emerging 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 and Mondrian Emerging 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 Mondrian Emerging Markets, you can compare the effects of market volatilities on Nasdaq 100 and Mondrian Emerging 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 with a short position of Mondrian Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Mondrian Emerging.
Diversification Opportunities for Nasdaq 100 and Mondrian Emerging
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nasdaq and Mondrian is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Mondrian Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondrian Emerging Markets and Nasdaq 100 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 Mondrian Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondrian Emerging Markets has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Mondrian Emerging go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Mondrian Emerging
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 2.67 times more return on investment than Mondrian Emerging. However, Nasdaq 100 is 2.67 times more volatile than Mondrian Emerging Markets. It trades about 0.23 of its potential returns per unit of risk. Mondrian Emerging Markets is currently generating about -0.25 per unit of risk. If you would invest 38,210 in Nasdaq 100 2x Strategy on September 3, 2024 and sell it today you would earn a total of 3,524 from holding Nasdaq 100 2x Strategy or generate 9.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Mondrian Emerging Markets
Performance |
| Timeline |
| Nasdaq 100 2x |
| Mondrian Emerging Markets |
Nasdaq 100 and Mondrian Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Mondrian Emerging
The main advantage of trading using opposite Nasdaq 100 and Mondrian Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Mondrian Emerging 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 Mondrian Emerging will offset losses from the drop in Mondrian Emerging's long position.| Nasdaq 100 vs. The Hartford Emerging | Nasdaq 100 vs. Kinetics Market Opportunities | Nasdaq 100 vs. Morgan Stanley Emerging | Nasdaq 100 vs. Locorr Market Trend |
| Mondrian Emerging vs. Franklin Mutual Global | Mondrian Emerging vs. Templeton Growth Fund | Mondrian Emerging vs. Franklin Real Estate | Mondrian Emerging vs. HUMANA INC |
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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