Correlation Between Nasdaq and Norsemont Mining

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

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

Diversification Opportunities for Nasdaq and Norsemont Mining

-0.41

Correlation Coefficient

Nasdaq  Norsemont Mining

Very good diversification

The 3 months correlation between Nasdaq and Norsemont is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Norsemont Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsemont Mining 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 Norsemont Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsemont Mining has no effect on the direction of Nasdaq i.e., Nasdaq and Norsemont Mining go up and down completely randomly.

Pair Corralation between Nasdaq and Norsemont Mining

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Norsemont Mining. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 5.53 times less risky than Norsemont Mining. The stock trades about -0.03 of its potential returns per unit of risk. The Norsemont Mining is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Norsemont Mining on December 30, 2024 and sell it today you would earn a total of  4.00  from holding Norsemont Mining or generate 30.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Nasdaq Inc  vs.  Norsemont Mining

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Norsemont Mining

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Norsemont Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Norsemont Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and Norsemont Mining

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

The idea behind Nasdaq Inc and Norsemont Mining 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.