Correlation Between Nasdaq and Europe 125x

Can any of the company-specific risk be diversified away by investing in both Nasdaq and Europe 125x 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 Europe 125x into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq Inc and Europe 125x Strategy, you can compare the effects of market volatilities on Nasdaq and Europe 125x 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 Europe 125x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Europe 125x.

Diversification Opportunities for Nasdaq and Europe 125x

-0.74

Correlation Coefficient

Nasdaq  Europe 125x

Pay attention - limited upside

The 3 months correlation between Nasdaq and Europe is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Europe 125x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europe 125x Strategy 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 Europe 125x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europe 125x Strategy has no effect on the direction of Nasdaq i.e., Nasdaq and Europe 125x go up and down completely randomly.

Pair Corralation between Nasdaq and Europe 125x

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.98 times more return on investment than Europe 125x. However, Nasdaq Inc is 1.02 times less risky than Europe 125x. It trades about 0.12 of its potential returns per unit of risk. Europe 125x Strategy is currently generating about -0.02 per unit of risk. If you would invest  5,459  in Nasdaq Inc on September 23, 2024 and sell it today you would earn a total of  2,311  from holding Nasdaq Inc or generate 42.33% return on investment over 90 days.

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

Nasdaq Inc  vs.  Europe 125x Strategy

Nasdaq Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 6 (%) 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.

Europe 125x Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Europe 125x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Nasdaq and Europe 125x

The main advantage of trading using opposite Nasdaq and Europe 125x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Europe 125x 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 Europe 125x will offset losses from the drop in Europe 125x's long position.

The idea behind Nasdaq Inc and Europe 125x Strategy 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.