Correlation Between Nasdaq and Mineral Resources

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

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

Diversification Opportunities for Nasdaq and Mineral Resources

-0.72

Correlation Coefficient

Nasdaq  Mineral Resources

Pay attention - limited upside

The 3 months correlation between Nasdaq and Mineral is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Mineral Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Resources 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 Mineral Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Resources has no effect on the direction of Nasdaq i.e., Nasdaq and Mineral Resources go up and down completely randomly.

Pair Corralation between Nasdaq and Mineral Resources

Given the investment horizon of 90 days Nasdaq is expected to generate 2.14 times less return on investment than Mineral Resources. But when comparing it to its historical volatility, Nasdaq Inc is 3.44 times less risky than Mineral Resources. It trades about 0.05 of its potential returns per unit of risk. Mineral Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,546  in Mineral Resources on September 17, 2024 and sell it today you would earn a total of  34.00  from holding Mineral Resources or generate 0.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Nasdaq Inc  vs.  Mineral Resources

Nasdaq Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 12 (%) 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.

Mineral Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mineral Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mineral Resources is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nasdaq and Mineral Resources

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

The idea behind Nasdaq Inc and Mineral Resources 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.