Correlation Between Nasdaq and Dun Bradstreet

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

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

Diversification Opportunities for Nasdaq and Dun Bradstreet

0.86

Correlation Coefficient

Nasdaq  Dun Bradstreet

Very poor diversification

The 3 months correlation between Nasdaq and Dun is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Dun Bradstreet Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dun Bradstreet Holdings 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 Dun Bradstreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dun Bradstreet Holdings has no effect on the direction of Nasdaq i.e., Nasdaq and Dun Bradstreet go up and down completely randomly.

Pair Corralation between Nasdaq and Dun Bradstreet

Given the investment horizon of 90 days Nasdaq is expected to generate 1.11 times less return on investment than Dun Bradstreet. But when comparing it to its historical volatility, Nasdaq Inc is 1.78 times less risky than Dun Bradstreet. It trades about 0.2 of its potential returns per unit of risk. Dun Bradstreet Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  912.00  in Dun Bradstreet Holdings on September 19, 2024 and sell it today you would earn a total of  321.00  from holding Dun Bradstreet Holdings or generate 35.2% return on investment over 90 days.

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

Nasdaq Inc  vs.  Dun Bradstreet Holdings

Nasdaq Inc

Risk-Adjusted Performance

9 of 100

Good

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.

Dun Bradstreet Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dun Bradstreet Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Dun Bradstreet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nasdaq and Dun Bradstreet

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

The idea behind Nasdaq Inc and Dun Bradstreet Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..