Correlation Between Nasdaq and Catalyst/millburn

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

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

Diversification Opportunities for Nasdaq and Catalyst/millburn

-0.16

Correlation Coefficient

Nasdaq  Catalyst/millburn

Good diversification

The 3 months correlation between Nasdaq and Catalyst/millburn is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Catalystmillburn Dynamic Commo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Dyn 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 Catalyst/millburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Dyn has no effect on the direction of Nasdaq i.e., Nasdaq and Catalyst/millburn go up and down completely randomly.

Pair Corralation between Nasdaq and Catalyst/millburn

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 1.08 times more return on investment than Catalyst/millburn. However, Nasdaq is 1.08 times more volatile than Catalystmillburn Dynamic Commodity. It trades about 0.16 of its potential returns per unit of risk. Catalystmillburn Dynamic Commodity is currently generating about -0.15 per unit of risk. If you would invest  7,066  in Nasdaq Inc on October 6, 2024 and sell it today you would earn a total of  756.00  from holding Nasdaq Inc or generate 10.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Nasdaq Inc  vs.  Catalystmillburn Dynamic Commo

Nasdaq Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 12 (%) 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 February 2025.

Catalystmillburn Dyn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catalystmillburn Dynamic Commodity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Nasdaq and Catalyst/millburn

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

The idea behind Nasdaq Inc and Catalystmillburn Dynamic Commodity 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..