Correlation Between ANSYS and Nasdaq

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

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

Diversification Opportunities for ANSYS and Nasdaq

0.95

Correlation Coefficient

ANSYS  Nasdaq

Almost no diversification

The 3 months correlation between ANSYS and Nasdaq is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ANSYS Inc and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc and ANSYS 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 ANSYS Inc 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 ANSYS i.e., ANSYS and Nasdaq go up and down completely randomly.

Pair Corralation between ANSYS and Nasdaq

Assuming the 90 days horizon ANSYS is expected to generate 1.03 times less return on investment than Nasdaq. But when comparing it to its historical volatility, ANSYS Inc is 1.11 times less risky than Nasdaq. It trades about 0.14 of its potential returns per unit of risk. Nasdaq Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,459  in Nasdaq Inc on September 17, 2024 and sell it today you would earn a total of  212.00  from holding Nasdaq Inc or generate 2.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

ANSYS Inc  vs.  Nasdaq Inc

ANSYS Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ANSYS Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ANSYS reported solid returns over the last few months and may actually be approaching a breakup point.

Nasdaq Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nasdaq reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ANSYS and Nasdaq

The main advantage of trading using opposite ANSYS and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANSYS 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 ANSYS Inc 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.