Correlation Between Nasdaq and Deep Well

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

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

Diversification Opportunities for Nasdaq and Deep Well

0.0

Correlation Coefficient

Nasdaq  Deep Well

Pay attention - limited upside

The 3 months correlation between Nasdaq and Deep is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Deep Well Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deep Well Oil 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 Deep Well. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deep Well Oil has no effect on the direction of Nasdaq i.e., Nasdaq and Deep Well go up and down completely randomly.

Pair Corralation between Nasdaq and Deep Well

If you would invest (100.00) in Deep Well Oil on December 27, 2024 and sell it today you would earn a total of  100.00  from holding Deep Well Oil or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Nasdaq Inc  vs.  Deep Well Oil

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.

Deep Well Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deep Well Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Deep Well is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nasdaq and Deep Well

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

The idea behind Nasdaq Inc and Deep Well Oil 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.