This module allows you to analyze existing cross correlation between Nasdaq and NQPH. You can compare the effects of market volatilities on Nasdaq and NQPH 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 NQPH. See also your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and NQPH.
Assuming 30 trading days horizon, Nasdaq is expected to generate 1.58 times more return on investment than NQPH. However, Nasdaq is 1.58 times more volatile than NQPH. It trades about -0.06 of its potential returns per unit of risk. NQPH is currently generating about -0.25 per unit of risk. If you would invest 742,146 in Nasdaq on March 27, 2018 and sell it today you would lose (41,772) from holding Nasdaq or give up 5.63% of portfolio value over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq and NQPH in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on NQPH 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 are associated (or correlated) with NQPH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NQPH has no effect on the direction of Nasdaq i.e. Nasdaq and NQPH go up and down completely randomly.
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