Correlation Between Nasdaq and Fuller Thaler

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

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

Diversification Opportunities for Nasdaq and Fuller Thaler

0.31

Correlation Coefficient

Nasdaq  Fuller Thaler

Weak diversification

The 3 months correlation between Nasdaq and Fuller is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Fuller Thaler Behavioral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuller Thaler Behavioral 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 Fuller Thaler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuller Thaler Behavioral has no effect on the direction of Nasdaq i.e., Nasdaq and Fuller Thaler go up and down completely randomly.

Pair Corralation between Nasdaq and Fuller Thaler

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.75 times more return on investment than Fuller Thaler. However, Nasdaq Inc is 1.33 times less risky than Fuller Thaler. It trades about 0.11 of its potential returns per unit of risk. Fuller Thaler Behavioral is currently generating about 0.05 per unit of risk. If you would invest  7,150  in Nasdaq Inc on December 5, 2024 and sell it today you would earn a total of  1,047  from holding Nasdaq Inc or generate 14.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nasdaq Inc  vs.  Fuller Thaler Behavioral

Nasdaq Inc

Risk-Adjusted Performance

Very 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.

Fuller Thaler Behavioral

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fuller Thaler Behavioral has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Nasdaq and Fuller Thaler

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

The idea behind Nasdaq Inc and Fuller Thaler Behavioral 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.