Correlation Between Capital Ice and Capital Nasdaq

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

By analyzing existing cross correlation between Capital Ice 7 and Capital Nasdaq Biotechnology, you can compare the effects of market volatilities on Capital Ice and Capital 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 Capital Ice with a short position of Capital Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Ice and Capital Nasdaq.

Diversification Opportunities for Capital Ice and Capital Nasdaq

0.44

Correlation Coefficient

Capital Ice  Capital Nasdaq

Very weak diversification

The 3 months correlation between Capital and Capital is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Capital Ice 7 and Capital Nasdaq Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Nasdaq Biote and Capital Ice 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 Capital Ice 7 are associated (or correlated) with Capital Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Nasdaq Biote has no effect on the direction of Capital Ice i.e., Capital Ice and Capital Nasdaq go up and down completely randomly.

Pair Corralation between Capital Ice and Capital Nasdaq

Assuming the 90 days trading horizon Capital Ice is expected to generate 5.0 times less return on investment than Capital Nasdaq. But when comparing it to its historical volatility, Capital Ice 7 is 2.8 times less risky than Capital Nasdaq. It trades about 0.01 of its potential returns per unit of risk. Capital Nasdaq Biotechnology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,821  in Capital Nasdaq Biotechnology on December 30, 2024 and sell it today you would earn a total of  16.00  from holding Capital Nasdaq Biotechnology or generate 0.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Capital Ice 7  vs.  Capital Nasdaq Biotechnology

Capital Ice 7

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital Ice 7 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Capital Ice is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Capital Nasdaq Biote

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Nasdaq Biotechnology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Capital Nasdaq is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Capital Ice and Capital Nasdaq

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

The idea behind Capital Ice 7 and Capital Nasdaq Biotechnology 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.