Correlation Between Nasdaq and ASN Broker

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

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

Diversification Opportunities for Nasdaq and ASN Broker

0.35

Correlation Coefficient

Nasdaq  ASN Broker

Weak diversification

The 3 months correlation between Nasdaq and ASN is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and ASN Broker Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASN Broker Public 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 ASN Broker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASN Broker Public has no effect on the direction of Nasdaq i.e., Nasdaq and ASN Broker go up and down completely randomly.

Pair Corralation between Nasdaq and ASN Broker

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.41 times more return on investment than ASN Broker. However, Nasdaq Inc is 2.41 times less risky than ASN Broker. It trades about 0.05 of its potential returns per unit of risk. ASN Broker Public is currently generating about -0.02 per unit of risk. If you would invest  5,915  in Nasdaq Inc on September 14, 2024 and sell it today you would earn a total of  2,121  from holding Nasdaq Inc or generate 35.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.17%
Values	Daily Returns

Nasdaq Inc  vs.  ASN Broker Public

Nasdaq Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 13 (%) 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.

ASN Broker Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ASN Broker Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, ASN Broker disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and ASN Broker

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

The idea behind Nasdaq Inc and ASN Broker Public 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..