Correlation Between Nasdaq and CARSALESCOM

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

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

Diversification Opportunities for Nasdaq and CARSALESCOM

0.85

Correlation Coefficient

Nasdaq  CARSALESCOM

Very poor diversification

The 3 months correlation between Nasdaq and CARSALESCOM is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of Nasdaq i.e., Nasdaq and CARSALESCOM go up and down completely randomly.

Pair Corralation between Nasdaq and CARSALESCOM

Assuming the 90 days horizon Nasdaq Inc is expected to generate 0.81 times more return on investment than CARSALESCOM. However, Nasdaq Inc is 1.23 times less risky than CARSALESCOM. It trades about 0.2 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.04 per unit of risk. If you would invest  6,583  in Nasdaq Inc on September 16, 2024 and sell it today you would earn a total of  1,088  from holding Nasdaq Inc or generate 16.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.48%
Values	Daily Returns

Nasdaq Inc  vs.  CARSALESCOM

Nasdaq Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Nasdaq reported solid returns over the last few months and may actually be approaching a breakup point.

CARSALESCOM

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CARSALESCOM are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, CARSALESCOM is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nasdaq and CARSALESCOM

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

The idea behind Nasdaq Inc and CARSALESCOM 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.