Correlation Between Nasdaq and Pantheon Resources

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

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

Diversification Opportunities for Nasdaq and Pantheon Resources

0.88

Correlation Coefficient

Nasdaq  Pantheon Resources

Very poor diversification

The 3 months correlation between Nasdaq and Pantheon is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Pantheon Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pantheon Resources Plc 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 Pantheon Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pantheon Resources Plc has no effect on the direction of Nasdaq i.e., Nasdaq and Pantheon Resources go up and down completely randomly.

Pair Corralation between Nasdaq and Pantheon Resources

Given the investment horizon of 90 days Nasdaq is expected to generate 4.28 times less return on investment than Pantheon Resources. But when comparing it to its historical volatility, Nasdaq Inc is 5.78 times less risky than Pantheon Resources. It trades about 0.26 of its potential returns per unit of risk. Pantheon Resources Plc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Pantheon Resources Plc on September 13, 2024 and sell it today you would earn a total of  11.00  from holding Pantheon Resources Plc or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.67%
Values	Daily Returns

Nasdaq Inc  vs.  Pantheon Resources Plc

Nasdaq Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 13 (%) 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.

Pantheon Resources Plc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pantheon Resources Plc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pantheon Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and Pantheon Resources

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

The idea behind Nasdaq Inc and Pantheon Resources Plc 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.