Correlation Between Nasdaq and Queen City

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

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

Diversification Opportunities for Nasdaq and Queen City

0.84

Correlation Coefficient

Nasdaq  Queen City

Very poor diversification

The 3 months correlation between Nasdaq and Queen is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Queen City Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Queen City Investments 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 Queen City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Queen City Investments has no effect on the direction of Nasdaq i.e., Nasdaq and Queen City go up and down completely randomly.

Pair Corralation between Nasdaq and Queen City

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.73 times more return on investment than Queen City. However, Nasdaq Inc is 1.36 times less risky than Queen City. It trades about 0.05 of its potential returns per unit of risk. Queen City Investments is currently generating about 0.03 per unit of risk. If you would invest  5,915  in Nasdaq Inc on September 14, 2024 and sell it today you would earn a total of  2,121  from holding Nasdaq Inc or generate 35.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	90.3%
Values	Daily Returns

Nasdaq Inc  vs.  Queen City Investments

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.

Queen City Investments

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Queen City Investments are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Queen City is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nasdaq and Queen City

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

The idea behind Nasdaq Inc and Queen City Investments 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .