Correlation Between Nasdaq and Capital Nasdaq

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

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

Diversification Opportunities for Nasdaq and Capital Nasdaq

-0.42

Correlation Coefficient

Nasdaq  Capital Nasdaq

Very good diversification

The 3 months correlation between Nasdaq and Capital is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc 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 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 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 Nasdaq i.e., Nasdaq and Capital Nasdaq go up and down completely randomly.

Pair Corralation between Nasdaq and Capital Nasdaq

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.88 times more return on investment than Capital Nasdaq. However, Nasdaq Inc is 1.13 times less risky than Capital Nasdaq. It trades about 0.16 of its potential returns per unit of risk. Capital Nasdaq Biotechnology is currently generating about -0.1 per unit of risk. If you would invest  7,249  in Nasdaq Inc on September 17, 2024 and sell it today you would earn a total of  763.00  from holding Nasdaq Inc or generate 10.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

Nasdaq Inc  vs.  Capital Nasdaq Biotechnology

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. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Capital Nasdaq Biote

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Nasdaq Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Nasdaq and Capital Nasdaq

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

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..