Correlation Between Nasdaq and Greenvale Energy

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

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

Diversification Opportunities for Nasdaq and Greenvale Energy

0.68

Correlation Coefficient

Nasdaq  Greenvale Energy

Poor diversification

The 3 months correlation between Nasdaq and Greenvale is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Greenvale Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenvale Energy 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 Greenvale Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenvale Energy has no effect on the direction of Nasdaq i.e., Nasdaq and Greenvale Energy go up and down completely randomly.

Pair Corralation between Nasdaq and Greenvale Energy

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Greenvale Energy. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 3.27 times less risky than Greenvale Energy. The stock trades about -0.26 of its potential returns per unit of risk. The Greenvale Energy is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  3.20  in Greenvale Energy on September 28, 2024 and sell it today you would lose (0.10) from holding Greenvale Energy or give up 3.13% of portfolio value over 90 days.

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

Nasdaq Inc  vs.  Greenvale Energy

Nasdaq Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 10 (%) 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.

Greenvale Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Greenvale Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Greenvale Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and Greenvale Energy

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

The idea behind Nasdaq Inc and Greenvale Energy 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.