Correlation Between Pabrai Wagons and Inverse Nasdaq
Can any of the company-specific risk be diversified away by investing in both Pabrai Wagons and Inverse 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 Pabrai Wagons and Inverse Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pabrai Wagons Institutional and Inverse Nasdaq 100 Strategy, you can compare the effects of market volatilities on Pabrai Wagons and Inverse 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 Pabrai Wagons with a short position of Inverse Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pabrai Wagons and Inverse Nasdaq.
Diversification Opportunities for Pabrai Wagons and Inverse Nasdaq
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pabrai and Inverse is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Pabrai Wagons Institutional and Inverse Nasdaq 100 Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Nasdaq 100 and Pabrai Wagons 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 Pabrai Wagons Institutional are associated (or correlated) with Inverse Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Nasdaq 100 has no effect on the direction of Pabrai Wagons i.e., Pabrai Wagons and Inverse Nasdaq go up and down completely randomly.
Pair Corralation between Pabrai Wagons and Inverse Nasdaq
Assuming the 90 days horizon Pabrai Wagons Institutional is expected to under-perform the Inverse Nasdaq. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pabrai Wagons Institutional is 1.25 times less risky than Inverse Nasdaq. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Inverse Nasdaq 100 Strategy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,074 in Inverse Nasdaq 100 Strategy on October 20, 2024 and sell it today you would earn a total of 4.00 from holding Inverse Nasdaq 100 Strategy or generate 0.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pabrai Wagons Institutional vs. Inverse Nasdaq 100 Strategy
Performance |
| Timeline |
| Pabrai Wagons Instit |
| Inverse Nasdaq 100 |
Pabrai Wagons and Inverse Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pabrai Wagons and Inverse Nasdaq
The main advantage of trading using opposite Pabrai Wagons and Inverse Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pabrai Wagons position performs unexpectedly, Inverse 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 Inverse Nasdaq will offset losses from the drop in Inverse Nasdaq's long position.| Pabrai Wagons vs. Mesirow Financial Small | Pabrai Wagons vs. Blackrock Financial Institutions | Pabrai Wagons vs. Davis Financial Fund | Pabrai Wagons vs. 1919 Financial Services |
| Inverse Nasdaq vs. Pabrai Wagons Institutional | Inverse Nasdaq vs. Vy Franklin Income | Inverse Nasdaq vs. Boyd Watterson Limited | Inverse Nasdaq vs. Ab E Opportunities |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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