Correlation Between Nasdaq and Adecco Group

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

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

Diversification Opportunities for Nasdaq and Adecco Group

-0.83

Correlation Coefficient

Nasdaq  Adecco Group

Pay attention - limited upside

The 3 months correlation between Nasdaq and Adecco is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Adecco Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group AG 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 Adecco Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecco Group AG has no effect on the direction of Nasdaq i.e., Nasdaq and Adecco Group go up and down completely randomly.

Pair Corralation between Nasdaq and Adecco Group

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.45 times more return on investment than Adecco Group. However, Nasdaq Inc is 2.23 times less risky than Adecco Group. It trades about 0.25 of its potential returns per unit of risk. Adecco Group AG is currently generating about -0.15 per unit of risk. If you would invest  7,115  in Nasdaq Inc on August 31, 2024 and sell it today you would earn a total of  1,190  from holding Nasdaq Inc or generate 16.73% return on investment over 90 days.

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

Nasdaq Inc  vs.  Adecco Group AG

Nasdaq Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq reported solid returns over the last few months and may actually be approaching a breakup point.

Adecco Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecco Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nasdaq and Adecco Group

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

The idea behind Nasdaq Inc and Adecco Group AG 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.