Correlation Between Nasdaq and Aritzia

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

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

Diversification Opportunities for Nasdaq and Aritzia

0.72

Correlation Coefficient

Nasdaq  Aritzia

Poor diversification

The 3 months correlation between Nasdaq and Aritzia is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Aritzia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aritzia 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 Aritzia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aritzia has no effect on the direction of Nasdaq i.e., Nasdaq and Aritzia go up and down completely randomly.

Pair Corralation between Nasdaq and Aritzia

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Aritzia. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 2.5 times less risky than Aritzia. The stock trades about -0.01 of its potential returns per unit of risk. The Aritzia is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,700  in Aritzia on December 26, 2024 and sell it today you would earn a total of  108.00  from holding Aritzia or generate 2.92% return on investment over 90 days.

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

Nasdaq Inc  vs.  Aritzia

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.

Aritzia

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aritzia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aritzia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nasdaq and Aritzia

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

The idea behind Nasdaq Inc and Aritzia 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 Global Correlations module to find global opportunities by holding instruments from different markets.