Correlation Between Nasdaq and Credit Agricole

Can any of the company-specific risk be diversified away by investing in both Nasdaq and Credit Agricole 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 Credit Agricole into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq Inc and Credit Agricole Egypt, you can compare the effects of market volatilities on Nasdaq and Credit Agricole 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 Credit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Credit Agricole.

Diversification Opportunities for Nasdaq and Credit Agricole

0.7

Correlation Coefficient

Nasdaq  Credit Agricole

Poor diversification

The 3 months correlation between Nasdaq and Credit is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Credit Agricole Egypt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Agricole Egypt 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 Credit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Agricole Egypt has no effect on the direction of Nasdaq i.e., Nasdaq and Credit Agricole go up and down completely randomly.

Pair Corralation between Nasdaq and Credit Agricole

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.53 times more return on investment than Credit Agricole. However, Nasdaq Inc is 1.88 times less risky than Credit Agricole. It trades about 0.15 of its potential returns per unit of risk. Credit Agricole Egypt is currently generating about 0.07 per unit of risk. If you would invest  7,308  in Nasdaq Inc on September 16, 2024 and sell it today you would earn a total of  704.00  from holding Nasdaq Inc or generate 9.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	81.54%
Values	Daily Returns

Nasdaq Inc  vs.  Credit Agricole Egypt

Nasdaq Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Credit Agricole Egypt

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Agricole Egypt are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Credit Agricole may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nasdaq and Credit Agricole

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

The idea behind Nasdaq Inc and Credit Agricole Egypt 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.