This module allows you to analyze existing cross correlation between All Ords and Nasdaq. You can compare the effects of market volatilities on All Ords and Nasdaq 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 All Ords with a short position of Nasdaq. See also your portfolio center. Please also check ongoing floating volatility patterns of All Ords and Nasdaq.
Assuming 30 trading days horizon, All Ords is expected to generate 0.48 times more return on investment than Nasdaq. However, All Ords is 2.08 times less risky than Nasdaq. It trades about 0.2 of its potential returns per unit of risk. Nasdaq is currently generating about 0.05 per unit of risk. If you would invest 620,530 in All Ords on June 15, 2018 and sell it today you would earn a total of 14,660 from holding All Ords or generate 2.36% return on investment over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding All Ords and Nasdaq in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq and All Ords 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 All Ords are associated (or correlated) with Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq has no effect on the direction of All Ords i.e. All Ords and Nasdaq go up and down completely randomly.
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