Correlation Between Nasdaq and GUARANTY TRUST

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

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

Diversification Opportunities for Nasdaq and GUARANTY TRUST

0.67

Correlation Coefficient

Nasdaq  GUARANTY TRUST

Poor diversification

The 3 months correlation between Nasdaq and GUARANTY is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and GUARANTY TRUST HOLDING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUARANTY TRUST HOLDING 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 GUARANTY TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUARANTY TRUST HOLDING has no effect on the direction of Nasdaq i.e., Nasdaq and GUARANTY TRUST go up and down completely randomly.

Pair Corralation between Nasdaq and GUARANTY TRUST

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the GUARANTY TRUST. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 1.56 times less risky than GUARANTY TRUST. The stock trades about -0.26 of its potential returns per unit of risk. The GUARANTY TRUST HOLDING is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  5,300  in GUARANTY TRUST HOLDING on September 28, 2024 and sell it today you would earn a total of  495.00  from holding GUARANTY TRUST HOLDING or generate 9.34% return on investment over 90 days.

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

Nasdaq Inc  vs.  GUARANTY TRUST HOLDING

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.

GUARANTY TRUST HOLDING

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GUARANTY TRUST HOLDING are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, GUARANTY TRUST displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and GUARANTY TRUST

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

The idea behind Nasdaq Inc and GUARANTY TRUST HOLDING 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.