Correlation Between Nasdaq and Rompetrol Rafi

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

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

Diversification Opportunities for Nasdaq and Rompetrol Rafi

-0.77

Correlation Coefficient

Nasdaq  Rompetrol Rafi

Pay attention - limited upside

The 3 months correlation between Nasdaq and Rompetrol is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Rompetrol Rafi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rompetrol Rafi 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 Rompetrol Rafi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rompetrol Rafi has no effect on the direction of Nasdaq i.e., Nasdaq and Rompetrol Rafi go up and down completely randomly.

Pair Corralation between Nasdaq and Rompetrol Rafi

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.33 times more return on investment than Rompetrol Rafi. However, Nasdaq Inc is 3.04 times less risky than Rompetrol Rafi. It trades about 0.07 of its potential returns per unit of risk. Rompetrol Rafi is currently generating about -0.02 per unit of risk. If you would invest  7,281  in Nasdaq Inc on October 15, 2024 and sell it today you would earn a total of  337.00  from holding Nasdaq Inc or generate 4.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.44%
Values	Daily Returns

Nasdaq Inc  vs.  Rompetrol Rafi

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.

Rompetrol Rafi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rompetrol Rafi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Rompetrol Rafi is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq and Rompetrol Rafi

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

The idea behind Nasdaq Inc and Rompetrol Rafi 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..