Correlation Between Nasdaq and Victory New

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

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

Diversification Opportunities for Nasdaq and Victory New

-0.27

Correlation Coefficient

Nasdaq  Victory New

Very good diversification

The 3 months correlation between Nasdaq and Victory is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Victory New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory New Materials 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 Victory New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory New Materials has no effect on the direction of Nasdaq i.e., Nasdaq and Victory New go up and down completely randomly.

Pair Corralation between Nasdaq and Victory New

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 1.39 times more return on investment than Victory New. However, Nasdaq is 1.39 times more volatile than Victory New Materials. It trades about -0.03 of its potential returns per unit of risk. Victory New Materials is currently generating about -0.13 per unit of risk. If you would invest  7,714  in Nasdaq Inc on December 29, 2024 and sell it today you would lose (223.00) from holding Nasdaq Inc or give up 2.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.8%
Values	Daily Returns

Nasdaq Inc  vs.  Victory New Materials

Nasdaq Inc

Risk-Adjusted Performance

Very 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.

Victory New Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory New Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Nasdaq and Victory New

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

The idea behind Nasdaq Inc and Victory New Materials 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.