Correlation Between Nasdaq and Group Eleven

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

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

Diversification Opportunities for Nasdaq and Group Eleven

0.43

Correlation Coefficient

Nasdaq  Group Eleven

Very weak diversification

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

Pair Corralation between Nasdaq and Group Eleven

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Group Eleven. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 3.44 times less risky than Group Eleven. The stock trades about -0.29 of its potential returns per unit of risk. The Group Eleven Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Group Eleven Resources on December 9, 2024 and sell it today you would earn a total of  0.00  from holding Group Eleven Resources or generate 0.0% return on investment over 90 days.

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

Nasdaq Inc  vs.  Group Eleven Resources

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.

Group Eleven Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Group Eleven Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Group Eleven showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and Group Eleven

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

The idea behind Nasdaq Inc and Group Eleven Resources 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.