Correlation Between Nasdaq and Fundo Investec

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

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

Diversification Opportunities for Nasdaq and Fundo Investec

-0.65

Correlation Coefficient

Nasdaq  Fundo Investec

Excellent diversification

The 3 months correlation between Nasdaq and Fundo is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Fundo Investec IMB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundo Investec IMB 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 Fundo Investec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundo Investec IMB has no effect on the direction of Nasdaq i.e., Nasdaq and Fundo Investec go up and down completely randomly.

Pair Corralation between Nasdaq and Fundo Investec

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.44 times more return on investment than Fundo Investec. However, Nasdaq Inc is 2.29 times less risky than Fundo Investec. It trades about -0.2 of its potential returns per unit of risk. Fundo Investec IMB is currently generating about -0.11 per unit of risk. If you would invest  8,128  in Nasdaq Inc on September 25, 2024 and sell it today you would lose (334.00) from holding Nasdaq Inc or give up 4.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Nasdaq Inc  vs.  Fundo Investec IMB

Nasdaq Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 8 (%) 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.

Fundo Investec IMB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo Investec IMB has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Nasdaq and Fundo Investec

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

The idea behind Nasdaq Inc and Fundo Investec IMB 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .