Correlation Between Nasdaq and CTS Eventim

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

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

Diversification Opportunities for Nasdaq and CTS Eventim

0.37

Correlation Coefficient

Nasdaq  CTS Eventim

Weak diversification

The 3 months correlation between Nasdaq and CTS is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and CTS Eventim AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Eventim AG 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 CTS Eventim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Eventim AG has no effect on the direction of Nasdaq i.e., Nasdaq and CTS Eventim go up and down completely randomly.

Pair Corralation between Nasdaq and CTS Eventim

Given the investment horizon of 90 days Nasdaq is expected to generate 7.46 times less return on investment than CTS Eventim. But when comparing it to its historical volatility, Nasdaq Inc is 1.4 times less risky than CTS Eventim. It trades about 0.04 of its potential returns per unit of risk. CTS Eventim AG is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  8,700  in CTS Eventim AG on December 3, 2024 and sell it today you would earn a total of  1,860  from holding CTS Eventim AG or generate 21.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Nasdaq Inc  vs.  CTS Eventim AG

Nasdaq Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 3 (%) 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.

CTS Eventim AG

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Eventim AG are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CTS Eventim reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and CTS Eventim

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

The idea behind Nasdaq Inc and CTS Eventim AG 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.