Correlation Between Nasdaq and Universal For

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

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

Diversification Opportunities for Nasdaq and Universal For

0.59

Correlation Coefficient

Nasdaq  Universal For

Very weak diversification

The 3 months correlation between Nasdaq and Universal is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Universal For Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal For Paper 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 Universal For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal For Paper has no effect on the direction of Nasdaq i.e., Nasdaq and Universal For go up and down completely randomly.

Pair Corralation between Nasdaq and Universal For

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.45 times more return on investment than Universal For. However, Nasdaq Inc is 2.21 times less risky than Universal For. It trades about 0.03 of its potential returns per unit of risk. Universal For Paper is currently generating about 0.01 per unit of risk. If you would invest  6,409  in Nasdaq Inc on September 28, 2024 and sell it today you would earn a total of  1,433  from holding Nasdaq Inc or generate 22.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	78.44%
Values	Daily Returns

Nasdaq Inc  vs.  Universal For Paper

Nasdaq Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) 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.

Universal For Paper

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Universal For Paper are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Universal For is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nasdaq and Universal For

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

The idea behind Nasdaq Inc and Universal For Paper 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..