Correlation Between Nasdaq and Multi Units

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

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

Diversification Opportunities for Nasdaq and Multi Units

0.16

Correlation Coefficient

Nasdaq  Multi Units

Average diversification

The 3 months correlation between Nasdaq and Multi is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Multi Units France in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units France 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 Multi Units. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units France has no effect on the direction of Nasdaq i.e., Nasdaq and Multi Units go up and down completely randomly.

Pair Corralation between Nasdaq and Multi Units

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.96 times more return on investment than Multi Units. However, Nasdaq Inc is 1.04 times less risky than Multi Units. It trades about 0.01 of its potential returns per unit of risk. Multi Units France is currently generating about -0.05 per unit of risk. If you would invest  7,714  in Nasdaq Inc on December 28, 2024 and sell it today you would earn a total of  39.00  from holding Nasdaq Inc or generate 0.51% return on investment over 90 days.

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

Nasdaq Inc  vs.  Multi Units France

Nasdaq Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Multi Units France

Risk-Adjusted Performance

Very Weak

Over the last 90 days Multi Units France has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking indicators, Multi Units 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 Multi Units

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

The idea behind Nasdaq Inc and Multi Units France 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.