Correlation Between Usaa Nasdaq and Palmer Square

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

By analyzing existing cross correlation between Usaa Nasdaq 100 and Palmer Square Ultra Short, you can compare the effects of market volatilities on Usaa Nasdaq and Palmer Square 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 Usaa Nasdaq with a short position of Palmer Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Usaa Nasdaq and Palmer Square.

Diversification Opportunities for Usaa Nasdaq and Palmer Square

0.33

Correlation Coefficient

Usaa Nasdaq  Palmer Square

Weak diversification

The 3 months correlation between Usaa and Palmer is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Usaa Nasdaq 100 and Palmer Square Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palmer Square Ultra and Usaa 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 Usaa Nasdaq 100 are associated (or correlated) with Palmer Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palmer Square Ultra has no effect on the direction of Usaa Nasdaq i.e., Usaa Nasdaq and Palmer Square go up and down completely randomly.

Pair Corralation between Usaa Nasdaq and Palmer Square

Assuming the 90 days horizon Usaa Nasdaq 100 is expected to generate 42.03 times more return on investment than Palmer Square. However, Usaa Nasdaq is 42.03 times more volatile than Palmer Square Ultra Short. It trades about 0.05 of its potential returns per unit of risk. Palmer Square Ultra Short is currently generating about 0.66 per unit of risk. If you would invest  5,102  in Usaa Nasdaq 100 on October 22, 2024 and sell it today you would earn a total of  179.00  from holding Usaa Nasdaq 100 or generate 3.51% return on investment over 90 days.

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

Usaa Nasdaq 100  vs.  Palmer Square Ultra Short

Usaa Nasdaq 100

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Usaa Nasdaq 100 are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Usaa Nasdaq is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Palmer Square Ultra

Risk-Adjusted Performance

51 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Palmer Square Ultra Short are ranked lower than 51 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Palmer Square is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Usaa Nasdaq and Palmer Square

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

The idea behind Usaa Nasdaq 100 and Palmer Square Ultra Short 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.