Correlation Between Avient Corp and Nasdaq

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

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

Diversification Opportunities for Avient Corp and Nasdaq

0.49

Correlation Coefficient

Avient Corp  Nasdaq

Very weak diversification

The 3 months correlation between Avient and Nasdaq is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Avient Corp and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc and Avient Corp 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 Avient Corp 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 Avient Corp i.e., Avient Corp and Nasdaq go up and down completely randomly.

Pair Corralation between Avient Corp and Nasdaq

Given the investment horizon of 90 days Avient Corp is expected to generate 1.42 times more return on investment than Nasdaq. However, Avient Corp is 1.42 times more volatile than Nasdaq Inc. It trades about 0.05 of its potential returns per unit of risk. Nasdaq Inc is currently generating about 0.05 per unit of risk. If you would invest  3,213  in Avient Corp on September 20, 2024 and sell it today you would earn a total of  1,379  from holding Avient Corp or generate 42.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Avient Corp  vs.  Nasdaq Inc

Avient Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avient Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Avient Corp is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Nasdaq Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Avient Corp and Nasdaq

The main advantage of trading using opposite Avient Corp and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avient Corp 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 Avient Corp 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.