Correlation Between Nasdaq and CSIF I

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

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

Diversification Opportunities for Nasdaq and CSIF I

-0.68

Correlation Coefficient

Nasdaq  CSIF I

Excellent diversification

The 3 months correlation between Nasdaq and CSIF is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and CSIF I Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSIF I Equity 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 CSIF I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSIF I Equity has no effect on the direction of Nasdaq i.e., Nasdaq and CSIF I go up and down completely randomly.

Pair Corralation between Nasdaq and CSIF I

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the CSIF I. In addition to that, Nasdaq is 1.5 times more volatile than CSIF I Equity. It trades about -0.22 of its total potential returns per unit of risk. CSIF I Equity is currently generating about -0.04 per unit of volatility. If you would invest  96,137  in CSIF I Equity on September 27, 2024 and sell it today you would lose (502.00) from holding CSIF I Equity or give up 0.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Nasdaq Inc  vs.  CSIF I Equity

Nasdaq Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 10 (%) 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.

CSIF I Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSIF I Equity has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong forward indicators, CSIF I is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nasdaq and CSIF I

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

The idea behind Nasdaq Inc and CSIF I Equity 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 Global Correlations module to find global opportunities by holding instruments from different markets.