Correlation Between Nasdaq and Macroblock

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

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

Diversification Opportunities for Nasdaq and Macroblock

-0.78

Correlation Coefficient

Nasdaq  Macroblock

Pay attention - limited upside

The 3 months correlation between Nasdaq and Macroblock is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Macroblock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macroblock 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 Macroblock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macroblock has no effect on the direction of Nasdaq i.e., Nasdaq and Macroblock go up and down completely randomly.

Pair Corralation between Nasdaq and Macroblock

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Macroblock. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 1.68 times less risky than Macroblock. The stock trades about -0.22 of its potential returns per unit of risk. The Macroblock is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  7,220  in Macroblock on September 28, 2024 and sell it today you would lose (140.00) from holding Macroblock or give up 1.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.91%
Values	Daily Returns

Nasdaq Inc  vs.  Macroblock

Nasdaq Inc

Risk-Adjusted Performance

10 of 100

Good

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.

Macroblock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macroblock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Nasdaq and Macroblock

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

The idea behind Nasdaq Inc and Macroblock 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.