Correlation Between Nasdaq-100(r) and Investec Emerging
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Investec 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(r) and Investec 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 Investec Emerging Markets, you can compare the effects of market volatilities on Nasdaq-100(r) and Investec 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(r) with a short position of Investec Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Investec Emerging.
Diversification Opportunities for Nasdaq-100(r) and Investec Emerging
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq-100(r) and Investec is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Investec Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec Emerging Markets 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 Investec Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec Emerging Markets has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Investec Emerging go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Investec Emerging
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 2.79 times more return on investment than Investec Emerging. However, Nasdaq-100(r) is 2.79 times more volatile than Investec Emerging Markets. It trades about 0.12 of its potential returns per unit of risk. Investec Emerging Markets is currently generating about -0.13 per unit of risk. If you would invest 38,727 in Nasdaq 100 2x Strategy on August 24, 2024 and sell it today you would earn a total of 2,331 from holding Nasdaq 100 2x Strategy or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Investec Emerging Markets
Performance |
| Timeline |
| Nasdaq 100 2x |
| Investec Emerging Markets |
Nasdaq-100(r) and Investec Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Investec Emerging
The main advantage of trading using opposite Nasdaq-100(r) and Investec Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Investec 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 Investec Emerging will offset losses from the drop in Investec Emerging's long position.| Nasdaq-100(r) vs. Goldman Sachs Large | Nasdaq-100(r) vs. Federated Mdt Large | Nasdaq-100(r) vs. Qs Large Cap | Nasdaq-100(r) vs. Aqr Large Cap |
| Investec Emerging vs. Pace Smallmedium Growth | Investec Emerging vs. Ab Centrated Growth | Investec Emerging vs. Small Pany Growth | Investec Emerging vs. Smallcap Growth Fund |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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