Correlation Between Nasdaq and SolarBank

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Can any of the company-specific risk be diversified away by investing in both Nasdaq and SolarBank 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 SolarBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and SolarBank, you can compare the effects of market volatilities on Nasdaq and SolarBank 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 SolarBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and SolarBank.

Diversification Opportunities for Nasdaq and SolarBank

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between Nasdaq and SolarBank is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and SolarBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarBank 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 SolarBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarBank has no effect on the direction of Nasdaq i.e., Nasdaq and SolarBank go up and down completely randomly.

Pair Corralation between Nasdaq and SolarBank

If you would invest  7,963  in Nasdaq Inc on September 14, 2024 and sell it today you would earn a total of  124.00  from holding Nasdaq Inc or generate 1.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy4.76%
ValuesDaily Returns

Nasdaq Inc  vs.  SolarBank

 Performance 
       Timeline  
Nasdaq Inc 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
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.
SolarBank 

Risk-Adjusted Performance

0 of 100

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

Nasdaq and SolarBank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nasdaq and SolarBank

The main advantage of trading using opposite Nasdaq and SolarBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, SolarBank 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 SolarBank will offset losses from the drop in SolarBank's long position.
The idea behind Nasdaq Inc and SolarBank 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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