Correlation Between Nasdaq-100(r) and Emerald Banking

Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Emerald Banking 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-100(r) and Emerald Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Emerald Banking And, you can compare the effects of market volatilities on Nasdaq-100(r) and Emerald Banking 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-100(r) with a short position of Emerald Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Emerald Banking.

Diversification Opportunities for Nasdaq-100(r) and Emerald Banking

0.78

Correlation Coefficient

Nasdaq-100(r)  Emerald Banking

Poor diversification

The 3 months correlation between Nasdaq-100(r) and Emerald is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Emerald Banking And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Banking And and Nasdaq-100(r) 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 100 2x Strategy are associated (or correlated) with Emerald Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Banking And has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Emerald Banking go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Emerald Banking

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 1.78 times more return on investment than Emerald Banking. However, Nasdaq-100(r) is 1.78 times more volatile than Emerald Banking And. It trades about -0.25 of its potential returns per unit of risk. Emerald Banking And is currently generating about -0.46 per unit of risk. If you would invest  61,190  in Nasdaq 100 2x Strategy on October 15, 2024 and sell it today you would lose (7,131) from holding Nasdaq 100 2x Strategy or give up 11.65% of portfolio value over 90 days.

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

Nasdaq 100 2x Strategy  vs.  Emerald Banking And

Nasdaq 100 2x

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nasdaq 100 2x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Nasdaq-100(r) is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Emerald Banking And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerald Banking And has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Emerald Banking is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq-100(r) and Emerald Banking

The main advantage of trading using opposite Nasdaq-100(r) and Emerald Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Emerald Banking 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 Emerald Banking will offset losses from the drop in Emerald Banking's long position.

The idea behind Nasdaq 100 2x Strategy and Emerald Banking And 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.