Correlation Between Nasdaq and Swire Properties
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Swire Properties 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 Swire Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Swire Properties Limited, you can compare the effects of market volatilities on Nasdaq and Swire Properties 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 Swire Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Swire Properties.
Diversification Opportunities for Nasdaq and Swire Properties
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nasdaq and Swire is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Swire Properties Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swire Properties 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 Swire Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swire Properties has no effect on the direction of Nasdaq i.e., Nasdaq and Swire Properties go up and down completely randomly.
Pair Corralation between Nasdaq and Swire Properties
Given the investment horizon of 90 days Nasdaq is expected to generate 4.59 times less return on investment than Swire Properties. But when comparing it to its historical volatility, Nasdaq Inc is 3.09 times less risky than Swire Properties. It trades about 0.05 of its potential returns per unit of risk. Swire Properties Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 66.00 in Swire Properties Limited on September 24, 2024 and sell it today you would earn a total of 122.00 from holding Swire Properties Limited or generate 184.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.42% |
Values | Daily Returns |
Nasdaq Inc vs. Swire Properties Limited
Performance |
Timeline |
Nasdaq Inc |
Swire Properties |
Nasdaq and Swire Properties Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nasdaq and Swire Properties
The main advantage of trading using opposite Nasdaq and Swire Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Swire Properties 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 Swire Properties will offset losses from the drop in Swire Properties' long position.The idea behind Nasdaq Inc and Swire Properties Limited 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.Swire Properties vs. Elmos Semiconductor SE | Swire Properties vs. Tower Semiconductor | Swire Properties vs. Perseus Mining Limited | Swire Properties vs. ALTAIR RES INC |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
CEOs Directory Screen CEOs from public companies around the world | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |