Correlation Between Inverse Nasdaq and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Inverse Nasdaq and Emerging Markets 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 Inverse Nasdaq and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Nasdaq 100 Strategy and Emerging Markets 2x, you can compare the effects of market volatilities on Inverse Nasdaq and Emerging Markets 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 Inverse Nasdaq with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Nasdaq and Emerging Markets.
Diversification Opportunities for Inverse Nasdaq and Emerging Markets
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Inverse and Emerging is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Nasdaq 100 Strategy and Emerging Markets 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Inverse 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 Inverse Nasdaq 100 Strategy are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Inverse Nasdaq i.e., Inverse Nasdaq and Emerging Markets go up and down completely randomly.
Pair Corralation between Inverse Nasdaq and Emerging Markets
Assuming the 90 days horizon Inverse Nasdaq 100 Strategy is expected to generate 0.44 times more return on investment than Emerging Markets. However, Inverse Nasdaq 100 Strategy is 2.28 times less risky than Emerging Markets. It trades about 0.11 of its potential returns per unit of risk. Emerging Markets 2x is currently generating about 0.04 per unit of risk. If you would invest 1,300 in Inverse Nasdaq 100 Strategy on February 2, 2024 and sell it today you would earn a total of 62.00 from holding Inverse Nasdaq 100 Strategy or generate 4.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Inverse Nasdaq 100 Strategy vs. Emerging Markets 2x
Performance |
Timeline |
Inverse Nasdaq 100 |
Emerging Markets |
Inverse Nasdaq and Emerging Markets Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Inverse Nasdaq and Emerging Markets
The main advantage of trading using opposite Inverse Nasdaq and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Nasdaq position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.The idea behind Inverse Nasdaq 100 Strategy and Emerging Markets 2x 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.Emerging Markets vs. Multisector Bond Sma | Emerging Markets vs. Ab Bond Inflation | Emerging Markets vs. Versatile Bond Portfolio | Emerging Markets vs. Ab Bond Inflation |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |