Correlation Between Nasdaq and GROUNDS REST

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

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

Diversification Opportunities for Nasdaq and GROUNDS REST

0.18

Correlation Coefficient

Nasdaq  GROUNDS REST

Average diversification

The 3 months correlation between Nasdaq and GROUNDS is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and GROUNDS REST NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GROUNDS REST NA 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 GROUNDS REST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GROUNDS REST NA has no effect on the direction of Nasdaq i.e., Nasdaq and GROUNDS REST go up and down completely randomly.

Pair Corralation between Nasdaq and GROUNDS REST

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.26 times more return on investment than GROUNDS REST. However, Nasdaq Inc is 3.91 times less risky than GROUNDS REST. It trades about 0.19 of its potential returns per unit of risk. GROUNDS REST NA is currently generating about 0.04 per unit of risk. If you would invest  5,911  in Nasdaq Inc on September 29, 2024 and sell it today you would earn a total of  1,931  from holding Nasdaq Inc or generate 32.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Nasdaq Inc  vs.  GROUNDS REST NA

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 January 2025.

GROUNDS REST NA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GROUNDS REST NA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, GROUNDS REST reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and GROUNDS REST

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

The idea behind Nasdaq Inc and GROUNDS REST NA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.