Correlation Between Nasdaq and 552953CH2

Can any of the company-specific risk be diversified away by investing in both Nasdaq and 552953CH2 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 552953CH2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq Inc and MGM RESORTS INTL, you can compare the effects of market volatilities on Nasdaq and 552953CH2 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 552953CH2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and 552953CH2.

Diversification Opportunities for Nasdaq and 552953CH2

-0.71

Correlation Coefficient

Nasdaq  552953CH2

Pay attention - limited upside

The 3 months correlation between Nasdaq and 552953CH2 is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and MGM RESORTS INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGM RESORTS INTL 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 552953CH2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGM RESORTS INTL has no effect on the direction of Nasdaq i.e., Nasdaq and 552953CH2 go up and down completely randomly.

Pair Corralation between Nasdaq and 552953CH2

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.71 times more return on investment than 552953CH2. However, Nasdaq Inc is 1.41 times less risky than 552953CH2. It trades about 0.23 of its potential returns per unit of risk. MGM RESORTS INTL is currently generating about -0.11 per unit of risk. If you would invest  7,184  in Nasdaq Inc on August 30, 2024 and sell it today you would earn a total of  1,121  from holding Nasdaq Inc or generate 15.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Nasdaq Inc  vs.  MGM RESORTS INTL

Nasdaq Inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq reported solid returns over the last few months and may actually be approaching a breakup point.

MGM RESORTS INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGM RESORTS INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for MGM RESORTS INTL investors.

Pair Trading with Nasdaq and 552953CH2

The main advantage of trading using opposite Nasdaq and 552953CH2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, 552953CH2 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 552953CH2 will offset losses from the drop in 552953CH2's long position.

The idea behind Nasdaq Inc and MGM RESORTS INTL 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.