Correlation Between Nasdaq and Vercom SA

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

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

Diversification Opportunities for Nasdaq and Vercom SA

-0.02

Correlation Coefficient

Nasdaq  Vercom SA

Good diversification

The 3 months correlation between Nasdaq and Vercom is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Vercom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vercom SA 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 Vercom SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vercom SA has no effect on the direction of Nasdaq i.e., Nasdaq and Vercom SA go up and down completely randomly.

Pair Corralation between Nasdaq and Vercom SA

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.63 times more return on investment than Vercom SA. However, Nasdaq Inc is 1.59 times less risky than Vercom SA. It trades about 0.06 of its potential returns per unit of risk. Vercom SA is currently generating about -0.03 per unit of risk. If you would invest  7,942  in Nasdaq Inc on September 12, 2024 and sell it today you would earn a total of  101.00  from holding Nasdaq Inc or generate 1.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Nasdaq Inc  vs.  Vercom SA

Nasdaq Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 14 (%) 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.

Vercom SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vercom SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Vercom SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nasdaq and Vercom SA

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

The idea behind Nasdaq Inc and Vercom SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.