Correlation Between Nasdaq and OZ Minerals

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

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

Diversification Opportunities for Nasdaq and OZ Minerals

0.17

Correlation Coefficient

Nasdaq  OZ Minerals

Average diversification

The 3 months correlation between Nasdaq and OZMLF is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and OZ Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OZ Minerals Limited 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 OZ Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OZ Minerals Limited has no effect on the direction of Nasdaq i.e., Nasdaq and OZ Minerals go up and down completely randomly.

Pair Corralation between Nasdaq and OZ Minerals

Given the investment horizon of 90 days Nasdaq is expected to generate 3.02 times less return on investment than OZ Minerals. But when comparing it to its historical volatility, Nasdaq Inc is 3.03 times less risky than OZ Minerals. It trades about 0.04 of its potential returns per unit of risk. OZ Minerals Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,728  in OZ Minerals Limited on September 19, 2024 and sell it today you would earn a total of  172.00  from holding OZ Minerals Limited or generate 9.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	19.35%
Values	Daily Returns

Nasdaq Inc  vs.  OZ Minerals Limited

Nasdaq Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 5 (%) 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.

OZ Minerals Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OZ Minerals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, OZ Minerals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nasdaq and OZ Minerals

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

The idea behind Nasdaq Inc and OZ Minerals Limited 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.