Correlation Between Nasdaq and FIT Holding

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Can any of the company-specific risk be diversified away by investing in both Nasdaq and FIT Holding 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 FIT Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and FIT Holding Co, you can compare the effects of market volatilities on Nasdaq and FIT Holding 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 FIT Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and FIT Holding.

Diversification Opportunities for Nasdaq and FIT Holding

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Nasdaq and FIT is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and FIT Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIT Holding 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 FIT Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIT Holding has no effect on the direction of Nasdaq i.e., Nasdaq and FIT Holding go up and down completely randomly.

Pair Corralation between Nasdaq and FIT Holding

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the FIT Holding. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 3.37 times less risky than FIT Holding. The stock trades about -0.19 of its potential returns per unit of risk. The FIT Holding Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,340  in FIT Holding Co on September 22, 2024 and sell it today you would lose (40.00) from holding FIT Holding Co or give up 0.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

Nasdaq Inc  vs.  FIT Holding Co

 Performance 
       Timeline  
Nasdaq Inc 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
FIT Holding 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in FIT Holding Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, FIT Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Nasdaq and FIT Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nasdaq and FIT Holding

The main advantage of trading using opposite Nasdaq and FIT Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, FIT Holding 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 FIT Holding will offset losses from the drop in FIT Holding's long position.
The idea behind Nasdaq Inc and FIT Holding Co 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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