Correlation Between Nasdaq and Mapfre SA

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

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

Diversification Opportunities for Nasdaq and Mapfre SA

0.05

Correlation Coefficient

Nasdaq  Mapfre SA

Significant diversification

The 3 months correlation between Nasdaq and Mapfre is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Mapfre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mapfre SA 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 Mapfre SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mapfre SA has no effect on the direction of Nasdaq i.e., Nasdaq and Mapfre SA go up and down completely randomly.

Pair Corralation between Nasdaq and Mapfre SA

Given the investment horizon of 90 days Nasdaq is expected to generate 15.77 times less return on investment than Mapfre SA. But when comparing it to its historical volatility, Nasdaq Inc is 1.37 times less risky than Mapfre SA. It trades about 0.01 of its potential returns per unit of risk. Mapfre SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  243.00  in Mapfre SA on December 28, 2024 and sell it today you would earn a total of  44.00  from holding Mapfre SA or generate 18.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Nasdaq Inc  vs.  Mapfre SA

Nasdaq Inc

Risk-Adjusted Performance

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.

Mapfre SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mapfre SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mapfre SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and Mapfre SA

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

The idea behind Nasdaq Inc and Mapfre SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.