Correlation Between Nasdaq and Metalla Royalty

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

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

Diversification Opportunities for Nasdaq and Metalla Royalty

-0.43

Correlation Coefficient

Nasdaq  Metalla Royalty

Very good diversification

The 3 months correlation between Nasdaq and Metalla is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Metalla Royalty Streaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalla Royalty Streaming 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 Metalla Royalty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalla Royalty Streaming has no effect on the direction of Nasdaq i.e., Nasdaq and Metalla Royalty go up and down completely randomly.

Pair Corralation between Nasdaq and Metalla Royalty

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.38 times more return on investment than Metalla Royalty. However, Nasdaq Inc is 2.65 times less risky than Metalla Royalty. It trades about -0.12 of its potential returns per unit of risk. Metalla Royalty Streaming is currently generating about -0.11 per unit of risk. If you would invest  7,984  in Nasdaq Inc on September 21, 2024 and sell it today you would lose (214.00) from holding Nasdaq Inc or give up 2.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Nasdaq Inc  vs.  Metalla Royalty Streaming

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.

Metalla Royalty Streaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metalla Royalty Streaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nasdaq and Metalla Royalty

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

The idea behind Nasdaq Inc and Metalla Royalty Streaming 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.