Correlation Between Nasdaq and The Tocqueville

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

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

Diversification Opportunities for Nasdaq and The Tocqueville

0.23

Correlation Coefficient

Nasdaq  The Tocqueville

Modest diversification

The 3 months correlation between Nasdaq and The is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and The Tocqueville International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tocqueville Inte 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 The Tocqueville. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tocqueville Inte has no effect on the direction of Nasdaq i.e., Nasdaq and The Tocqueville go up and down completely randomly.

Pair Corralation between Nasdaq and The Tocqueville

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.93 times more return on investment than The Tocqueville. However, Nasdaq Inc is 1.08 times less risky than The Tocqueville. It trades about -0.02 of its potential returns per unit of risk. The Tocqueville International is currently generating about -0.09 per unit of risk. If you would invest  7,712  in Nasdaq Inc on December 19, 2024 and sell it today you would lose (182.00) from holding Nasdaq Inc or give up 2.36% of portfolio value over 90 days.

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

Nasdaq Inc  vs.  The Tocqueville International

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Tocqueville Inte

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Tocqueville International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Nasdaq and The Tocqueville

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

The idea behind Nasdaq Inc and The Tocqueville International 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.