Correlation Between Nasdaq and EAST SIDE

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

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

Diversification Opportunities for Nasdaq and EAST SIDE

-0.78

Correlation Coefficient

Nasdaq  EAST SIDE

Pay attention - limited upside

The 3 months correlation between Nasdaq and EAST is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and EAST SIDE GAMES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAST SIDE GAMES 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 EAST SIDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAST SIDE GAMES has no effect on the direction of Nasdaq i.e., Nasdaq and EAST SIDE go up and down completely randomly.

Pair Corralation between Nasdaq and EAST SIDE

Assuming the 90 days horizon Nasdaq Inc is expected to generate 0.25 times more return on investment than EAST SIDE. However, Nasdaq Inc is 3.99 times less risky than EAST SIDE. It trades about 0.23 of its potential returns per unit of risk. EAST SIDE GAMES is currently generating about -0.04 per unit of risk. If you would invest  6,493  in Nasdaq Inc on September 18, 2024 and sell it today you would earn a total of  1,236  from holding Nasdaq Inc or generate 19.04% return on investment over 90 days.

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

Nasdaq Inc  vs.  EAST SIDE GAMES

Nasdaq Inc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 18 (%) 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.

EAST SIDE GAMES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EAST SIDE GAMES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Pair Trading with Nasdaq and EAST SIDE

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

The idea behind Nasdaq Inc and EAST SIDE GAMES 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.