Correlation Between Origin Materials and Nasdaq

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

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

Diversification Opportunities for Origin Materials and Nasdaq

-0.8

Correlation Coefficient

Origin Materials  Nasdaq

Pay attention - limited upside

The 3 months correlation between Origin and Nasdaq is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Origin Materials and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc and Origin Materials 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 Origin Materials are associated (or correlated) with Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of Origin Materials i.e., Origin Materials and Nasdaq go up and down completely randomly.

Pair Corralation between Origin Materials and Nasdaq

Given the investment horizon of 90 days Origin Materials is expected to under-perform the Nasdaq. In addition to that, Origin Materials is 5.53 times more volatile than Nasdaq Inc. It trades about -0.02 of its total potential returns per unit of risk. Nasdaq Inc is currently generating about 0.01 per unit of volatility. If you would invest  7,954  in Nasdaq Inc on September 19, 2024 and sell it today you would earn a total of  7.00  from holding Nasdaq Inc or generate 0.09% return on investment over 90 days.

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

Origin Materials  vs.  Nasdaq Inc

Origin Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Origin Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Nasdaq Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) 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.

Pair Trading with Origin Materials and Nasdaq

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

The idea behind Origin Materials and Nasdaq Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.