Correlation Between Nasdaq and Item 9

Can any of the company-specific risk be diversified away by investing in both Nasdaq and Item 9 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 Item 9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq Inc and Item 9 Labs, you can compare the effects of market volatilities on Nasdaq and Item 9 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 Item 9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Item 9.

Diversification Opportunities for Nasdaq and Item 9

0.2

Correlation Coefficient

Nasdaq  Item 9

Modest diversification

The 3 months correlation between Nasdaq and Item is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Item 9 Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Item 9 Labs 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 Item 9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Item 9 Labs has no effect on the direction of Nasdaq i.e., Nasdaq and Item 9 go up and down completely randomly.

Pair Corralation between Nasdaq and Item 9

Given the investment horizon of 90 days Nasdaq is expected to generate 168.46 times less return on investment than Item 9. But when comparing it to its historical volatility, Nasdaq Inc is 182.01 times less risky than Item 9. It trades about 0.17 of its potential returns per unit of risk. Item 9 Labs is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Item 9 Labs on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Item 9 Labs or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Nasdaq Inc  vs.  Item 9 Labs

Nasdaq Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 13 (%) 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.

Item 9 Labs

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Item 9 Labs are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Item 9 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and Item 9

The main advantage of trading using opposite Nasdaq and Item 9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Item 9 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 Item 9 will offset losses from the drop in Item 9's long position.

The idea behind Nasdaq Inc and Item 9 Labs 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 Anywhere module to track or share privately all of your investments from the convenience of any device.