Correlation Between Nasdaq 100 and Europac International
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 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 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 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 with a short position of Europac International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Europac International.
Diversification Opportunities for Nasdaq 100 and Europac International
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nasdaq and Europac is -0.46. 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 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 i.e., Nasdaq 100 and Europac International go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Europac International
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 3.24 times more return on investment than Europac International. However, Nasdaq 100 is 3.24 times more volatile than Europac International Value. It trades about 0.09 of its potential returns per unit of risk. Europac International Value is currently generating about 0.08 per unit of risk. If you would invest 36,990 in Nasdaq 100 2x Strategy on August 26, 2024 and sell it today you would earn a total of 20,286 from holding Nasdaq 100 2x Strategy or generate 54.84% 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 and Europac International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Europac International
The main advantage of trading using opposite Nasdaq 100 and Europac International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 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 vs. Nasdaq 100 2x Strategy | Nasdaq 100 vs. Direxion Monthly Nasdaq 100 | Nasdaq 100 vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Nasdaq 100 vs. Nasdaq 100 2x Strategy |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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