Correlation Between Nasdaq and Climb Bio

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

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

Diversification Opportunities for Nasdaq and Climb Bio

-0.73

Correlation Coefficient

Nasdaq  Climb Bio

Pay attention - limited upside

The 3 months correlation between Nasdaq and Climb is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Climb Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Climb Bio 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 Climb Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Climb Bio has no effect on the direction of Nasdaq i.e., Nasdaq and Climb Bio go up and down completely randomly.

Pair Corralation between Nasdaq and Climb Bio

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.21 times more return on investment than Climb Bio. However, Nasdaq Inc is 4.76 times less risky than Climb Bio. It trades about -0.19 of its potential returns per unit of risk. Climb Bio is currently generating about -0.4 per unit of risk. If you would invest  8,064  in Nasdaq Inc on September 22, 2024 and sell it today you would lose (326.00) from holding Nasdaq Inc or give up 4.04% of portfolio value over 90 days.

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

Nasdaq Inc  vs.  Climb Bio

Nasdaq Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 6 (%) 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.

Climb Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Climb Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Nasdaq and Climb Bio

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

The idea behind Nasdaq Inc and Climb Bio 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.

Check out your portfolio center.

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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.