Correlation Between Nordex SE and SPX Corp

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

By analyzing existing cross correlation between Nordex SE and SPX Corp, you can compare the effects of market volatilities on Nordex SE and SPX Corp 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 Nordex SE with a short position of SPX Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordex SE and SPX Corp.

Diversification Opportunities for Nordex SE and SPX Corp

-0.26

Correlation Coefficient

Nordex SE  SPX Corp

Very good diversification

The 3 months correlation between Nordex and SPX is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nordex SE and SPX Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPX Corp and Nordex SE 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 Nordex SE are associated (or correlated) with SPX Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPX Corp has no effect on the direction of Nordex SE i.e., Nordex SE and SPX Corp go up and down completely randomly.

Pair Corralation between Nordex SE and SPX Corp

Assuming the 90 days horizon Nordex SE is expected to generate 4.44 times less return on investment than SPX Corp. In addition to that, Nordex SE is 1.24 times more volatile than SPX Corp. It trades about 0.02 of its total potential returns per unit of risk. SPX Corp is currently generating about 0.1 per unit of volatility. If you would invest  6,690  in SPX Corp on September 2, 2024 and sell it today you would earn a total of  10,954  from holding SPX Corp or generate 163.74% return on investment over 90 days.

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

Nordex SE  vs.  SPX Corp

Nordex SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordex SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady 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.

SPX Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPX Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, SPX Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordex SE and SPX Corp

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

The idea behind Nordex SE and SPX Corp 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.