Correlation Between Nasdaq and BANDAI NAMCO

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

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

Diversification Opportunities for Nasdaq and BANDAI NAMCO

-0.67

Correlation Coefficient

Nasdaq  BANDAI NAMCO

Excellent diversification

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

Pair Corralation between Nasdaq and BANDAI NAMCO

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.48 times more return on investment than BANDAI NAMCO. However, Nasdaq Inc is 2.08 times less risky than BANDAI NAMCO. It trades about 0.18 of its potential returns per unit of risk. BANDAI NAMCO Holdings is currently generating about -0.03 per unit of risk. If you would invest  7,278  in Nasdaq Inc on September 13, 2024 and sell it today you would earn a total of  853.00  from holding Nasdaq Inc or generate 11.72% return on investment over 90 days.

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

Nasdaq Inc  vs.  BANDAI NAMCO Holdings

Nasdaq Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 14 (%) 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.

BANDAI NAMCO Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANDAI NAMCO Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, BANDAI NAMCO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq and BANDAI NAMCO

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

The idea behind Nasdaq Inc and BANDAI NAMCO Holdings 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.