Correlation Between Everest and Nasdaq

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

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

Diversification Opportunities for Everest and Nasdaq

-0.46

Correlation Coefficient

Everest  Nasdaq

Very good diversification

The 3 months correlation between Everest and Nasdaq is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Everest Group and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc and Everest 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 Everest Group 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 Everest i.e., Everest and Nasdaq go up and down completely randomly.

Pair Corralation between Everest and Nasdaq

Allowing for the 90-day total investment horizon Everest Group is expected to generate 0.93 times more return on investment than Nasdaq. However, Everest Group is 1.08 times less risky than Nasdaq. It trades about 0.02 of its potential returns per unit of risk. Nasdaq Inc is currently generating about -0.03 per unit of risk. If you would invest  35,767  in Everest Group on December 28, 2024 and sell it today you would earn a total of  432.00  from holding Everest Group or generate 1.21% return on investment over 90 days.

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

Everest Group  vs.  Nasdaq Inc

Everest Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everest Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Everest is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nasdaq Inc

Risk-Adjusted Performance

Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Everest and Nasdaq

The main advantage of trading using opposite Everest and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everest 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 Everest Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.