Correlation Between Nasdaq and International Strategic

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

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

Diversification Opportunities for Nasdaq and International Strategic

-0.62

Correlation Coefficient

Nasdaq  International Strategic

Excellent diversification

The 3 months correlation between Nasdaq and International is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and International Strategic Equiti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Strategic 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 International Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Strategic has no effect on the direction of Nasdaq i.e., Nasdaq and International Strategic go up and down completely randomly.

Pair Corralation between Nasdaq and International Strategic

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the International Strategic. In addition to that, Nasdaq is 1.4 times more volatile than International Strategic Equities. It trades about -0.18 of its total potential returns per unit of risk. International Strategic Equities is currently generating about -0.24 per unit of volatility. If you would invest  1,316  in International Strategic Equities on September 23, 2024 and sell it today you would lose (48.00) from holding International Strategic Equities or give up 3.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Nasdaq Inc  vs.  International Strategic Equiti

Nasdaq Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 6 (%) 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.

International Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Strategic Equities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, International Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq and International Strategic

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

The idea behind Nasdaq Inc and International Strategic Equities 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.