Correlation Between Nasdaq and NTG Clarity

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

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

Diversification Opportunities for Nasdaq and NTG Clarity

0.35

Correlation Coefficient

Nasdaq  NTG Clarity

Weak diversification

The 3 months correlation between Nasdaq and NTG is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and NTG Clarity Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Clarity Networks 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 NTG Clarity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Clarity Networks has no effect on the direction of Nasdaq i.e., Nasdaq and NTG Clarity go up and down completely randomly.

Pair Corralation between Nasdaq and NTG Clarity

Given the investment horizon of 90 days Nasdaq is expected to generate 12.84 times less return on investment than NTG Clarity. But when comparing it to its historical volatility, Nasdaq Inc is 6.87 times less risky than NTG Clarity. It trades about 0.05 of its potential returns per unit of risk. NTG Clarity Networks is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  15.00  in NTG Clarity Networks on September 26, 2024 and sell it today you would earn a total of  142.00  from holding NTG Clarity Networks or generate 946.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Nasdaq Inc  vs.  NTG Clarity Networks

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.

NTG Clarity Networks

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NTG Clarity Networks are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NTG Clarity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and NTG Clarity

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

The idea behind Nasdaq Inc and NTG Clarity Networks 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.