Correlation Between Nasdaq and Egyptian Media

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

By analyzing existing cross correlation between Nasdaq Inc and Egyptian Media Production, you can compare the effects of market volatilities on Nasdaq and Egyptian Media 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 Egyptian Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Egyptian Media.

Diversification Opportunities for Nasdaq and Egyptian Media

0.09

Correlation Coefficient

Nasdaq  Egyptian Media

Significant diversification

The 3 months correlation between Nasdaq and Egyptian is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Egyptian Media Production in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Media Production 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 Egyptian Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Media Production has no effect on the direction of Nasdaq i.e., Nasdaq and Egyptian Media go up and down completely randomly.

Pair Corralation between Nasdaq and Egyptian Media

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.72 times more return on investment than Egyptian Media. However, Nasdaq Inc is 1.4 times less risky than Egyptian Media. It trades about 0.01 of its potential returns per unit of risk. Egyptian Media Production is currently generating about -0.07 per unit of risk. If you would invest  8,192  in Nasdaq Inc on December 5, 2024 and sell it today you would earn a total of  5.00  from holding Nasdaq Inc or generate 0.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Nasdaq Inc  vs.  Egyptian Media Production

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Egyptian Media Production

Risk-Adjusted Performance

Very Weak

Over the last 90 days Egyptian Media Production has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nasdaq and Egyptian Media

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

The idea behind Nasdaq Inc and Egyptian Media Production 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.