Correlation Between Nasdaq and Globaltek Fabrication

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

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

Diversification Opportunities for Nasdaq and Globaltek Fabrication

-0.44

Correlation Coefficient

Nasdaq  Globaltek Fabrication

Very good diversification

The 3 months correlation between Nasdaq and Globaltek is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Globaltek Fabrication Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globaltek Fabrication 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 Globaltek Fabrication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globaltek Fabrication has no effect on the direction of Nasdaq i.e., Nasdaq and Globaltek Fabrication go up and down completely randomly.

Pair Corralation between Nasdaq and Globaltek Fabrication

Given the investment horizon of 90 days Nasdaq is expected to generate 20.17 times less return on investment than Globaltek Fabrication. But when comparing it to its historical volatility, Nasdaq Inc is 1.23 times less risky than Globaltek Fabrication. It trades about 0.01 of its potential returns per unit of risk. Globaltek Fabrication Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  6,990  in Globaltek Fabrication Co on December 5, 2024 and sell it today you would earn a total of  300.00  from holding Globaltek Fabrication Co or generate 4.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nasdaq Inc  vs.  Globaltek Fabrication Co

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Globaltek Fabrication

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globaltek Fabrication Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Globaltek Fabrication is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Nasdaq and Globaltek Fabrication

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

The idea behind Nasdaq Inc and Globaltek Fabrication Co 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.