Correlation Between Nasdaq and Xtrackers Harvest

Can any of the company-specific risk be diversified away by investing in both Nasdaq and Xtrackers Harvest 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 and Xtrackers Harvest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq Inc and Xtrackers Harvest CSI, you can compare the effects of market volatilities on Nasdaq and Xtrackers Harvest 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 with a short position of Xtrackers Harvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Xtrackers Harvest.

Diversification Opportunities for Nasdaq and Xtrackers Harvest

0.12

Correlation Coefficient

Nasdaq  Xtrackers Harvest

Average diversification

The 3 months correlation between Nasdaq and Xtrackers is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Xtrackers Harvest CSI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Harvest CSI and Nasdaq 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 Inc are associated (or correlated) with Xtrackers Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Harvest CSI has no effect on the direction of Nasdaq i.e., Nasdaq and Xtrackers Harvest go up and down completely randomly.

Pair Corralation between Nasdaq and Xtrackers Harvest

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.38 times more return on investment than Xtrackers Harvest. However, Nasdaq Inc is 2.65 times less risky than Xtrackers Harvest. It trades about 0.01 of its potential returns per unit of risk. Xtrackers Harvest CSI is currently generating about 0.0 per unit of risk. If you would invest  7,954  in Nasdaq Inc on September 19, 2024 and sell it today you would earn a total of  7.00  from holding Nasdaq Inc or generate 0.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nasdaq Inc  vs.  Xtrackers Harvest CSI

Nasdaq Inc

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Xtrackers Harvest CSI

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Harvest CSI are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical indicators, Xtrackers Harvest unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and Xtrackers Harvest

The main advantage of trading using opposite Nasdaq and Xtrackers Harvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Xtrackers Harvest 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 Xtrackers Harvest will offset losses from the drop in Xtrackers Harvest's long position.

The idea behind Nasdaq Inc and Xtrackers Harvest CSI pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.