Correlation Between Nasdaq and VanEck Uranium

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

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

Diversification Opportunities for Nasdaq and VanEck Uranium

0.73

Correlation Coefficient

Nasdaq  VanEck Uranium

Poor diversification

The 3 months correlation between Nasdaq and VanEck is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and VanEck Uranium and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Uranium 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 VanEck Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Uranium has no effect on the direction of Nasdaq i.e., Nasdaq and VanEck Uranium go up and down completely randomly.

Pair Corralation between Nasdaq and VanEck Uranium

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.51 times more return on investment than VanEck Uranium. However, Nasdaq Inc is 1.96 times less risky than VanEck Uranium. It trades about 0.11 of its potential returns per unit of risk. VanEck Uranium and is currently generating about -0.03 per unit of risk. If you would invest  7,853  in Nasdaq Inc on September 16, 2024 and sell it today you would earn a total of  159.00  from holding Nasdaq Inc or generate 2.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Nasdaq Inc  vs.  VanEck Uranium and

Nasdaq Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 11 (%) 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.

VanEck Uranium

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Uranium and are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, VanEck Uranium showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and VanEck Uranium

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

The idea behind Nasdaq Inc and VanEck Uranium and 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.