Correlation Between MEDICAL FACILITIES and Nasdaq

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

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

Diversification Opportunities for MEDICAL FACILITIES and Nasdaq

0.92

Correlation Coefficient

MEDICAL FACILITIES  Nasdaq

Almost no diversification

The 3 months correlation between MEDICAL and Nasdaq is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc and MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW 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 Inc has no effect on the direction of MEDICAL FACILITIES i.e., MEDICAL FACILITIES and Nasdaq go up and down completely randomly.

Pair Corralation between MEDICAL FACILITIES and Nasdaq

Assuming the 90 days horizon MEDICAL FACILITIES NEW is expected to generate 1.22 times more return on investment than Nasdaq. However, MEDICAL FACILITIES is 1.22 times more volatile than Nasdaq Inc. It trades about 0.04 of its potential returns per unit of risk. Nasdaq Inc is currently generating about -0.11 per unit of risk. If you would invest  1,011  in MEDICAL FACILITIES NEW on October 10, 2024 and sell it today you would earn a total of  9.00  from holding MEDICAL FACILITIES NEW or generate 0.89% return on investment over 90 days.

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

MEDICAL FACILITIES NEW  vs.  Nasdaq Inc

MEDICAL FACILITIES NEW

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MEDICAL FACILITIES NEW are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, MEDICAL FACILITIES reported solid returns over the last few months and may actually be approaching a breakup point.

Nasdaq Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MEDICAL FACILITIES and Nasdaq

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

The idea behind MEDICAL FACILITIES NEW and Nasdaq Inc 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.