Correlation Between Nasdaq and HOCHSCHILD MINING

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

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

Diversification Opportunities for Nasdaq and HOCHSCHILD MINING

0.53

Correlation Coefficient

Nasdaq  HOCHSCHILD MINING

Very weak diversification

The 3 months correlation between Nasdaq and HOCHSCHILD is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and HOCHSCHILD MINING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOCHSCHILD MINING 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 HOCHSCHILD MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOCHSCHILD MINING has no effect on the direction of Nasdaq i.e., Nasdaq and HOCHSCHILD MINING go up and down completely randomly.

Pair Corralation between Nasdaq and HOCHSCHILD MINING

Assuming the 90 days horizon Nasdaq is expected to generate 1.21 times less return on investment than HOCHSCHILD MINING. But when comparing it to its historical volatility, Nasdaq Inc is 2.93 times less risky than HOCHSCHILD MINING. It trades about 0.23 of its potential returns per unit of risk. HOCHSCHILD MINING is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  217.00  in HOCHSCHILD MINING on September 18, 2024 and sell it today you would earn a total of  42.00  from holding HOCHSCHILD MINING or generate 19.35% return on investment over 90 days.

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

Nasdaq Inc  vs.  HOCHSCHILD MINING

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.

HOCHSCHILD MINING

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HOCHSCHILD MINING are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, HOCHSCHILD MINING exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and HOCHSCHILD MINING

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

The idea behind Nasdaq Inc and HOCHSCHILD MINING 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..