Correlation Between Nasdaq and Absa Multi

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

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

Diversification Opportunities for Nasdaq and Absa Multi

0.89

Correlation Coefficient

Nasdaq  Absa Multi

Very poor diversification

The 3 months correlation between Nasdaq and Absa is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Absa Multi managed Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absa Multi managed 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 Absa Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absa Multi managed has no effect on the direction of Nasdaq i.e., Nasdaq and Absa Multi go up and down completely randomly.

Pair Corralation between Nasdaq and Absa Multi

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 3.63 times more return on investment than Absa Multi. However, Nasdaq is 3.63 times more volatile than Absa Multi managed Absolute. It trades about 0.15 of its potential returns per unit of risk. Absa Multi managed Absolute is currently generating about 0.16 per unit of risk. If you would invest  7,308  in Nasdaq Inc on September 16, 2024 and sell it today you would earn a total of  704.00  from holding Nasdaq Inc or generate 9.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Nasdaq Inc  vs.  Absa Multi managed Absolute

Nasdaq Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 11 (%) 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.

Absa Multi managed

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Absa Multi managed Absolute are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Absa Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq and Absa Multi

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

The idea behind Nasdaq Inc and Absa Multi managed Absolute 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.