Correlation Between Nasdaq and Sanlam Global

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

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

Diversification Opportunities for Nasdaq and Sanlam Global

0.89

Correlation Coefficient

Nasdaq  Sanlam Global

Very poor diversification

The 3 months correlation between Nasdaq and Sanlam is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Sanlam Global Artificial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanlam Global Artificial 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 Sanlam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanlam Global Artificial has no effect on the direction of Nasdaq i.e., Nasdaq and Sanlam Global go up and down completely randomly.

Pair Corralation between Nasdaq and Sanlam Global

Given the investment horizon of 90 days Nasdaq is expected to generate 37.96 times less return on investment than Sanlam Global. But when comparing it to its historical volatility, Nasdaq Inc is 32.8 times less risky than Sanlam Global. It trades about 0.04 of its potential returns per unit of risk. Sanlam Global Artificial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Sanlam Global Artificial on October 4, 2024 and sell it today you would earn a total of  37,734  from holding Sanlam Global Artificial or generate 16406.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.6%
Values	Daily Returns

Nasdaq Inc  vs.  Sanlam Global Artificial

Nasdaq Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) 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 February 2025.

Sanlam Global Artificial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sanlam Global Artificial are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively weak technical and fundamental indicators, Sanlam Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nasdaq and Sanlam Global

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

The idea behind Nasdaq Inc and Sanlam Global Artificial 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.