Correlation Between Nasdaq and Av Gad

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

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

Diversification Opportunities for Nasdaq and Av Gad

0.72

Correlation Coefficient

Nasdaq  Av Gad

Poor diversification

The 3 months correlation between Nasdaq and AVGD is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Av Gad Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Av Gad Holdings 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 Av Gad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Av Gad Holdings has no effect on the direction of Nasdaq i.e., Nasdaq and Av Gad go up and down completely randomly.

Pair Corralation between Nasdaq and Av Gad

Given the investment horizon of 90 days Nasdaq is expected to generate 2.92 times less return on investment than Av Gad. But when comparing it to its historical volatility, Nasdaq Inc is 2.1 times less risky than Av Gad. It trades about 0.15 of its potential returns per unit of risk. Av Gad Holdings is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  163,000  in Av Gad Holdings on September 15, 2024 and sell it today you would earn a total of  34,900  from holding Av Gad Holdings or generate 21.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	73.44%
Values	Daily Returns

Nasdaq Inc  vs.  Av Gad Holdings

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.

Av Gad Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Av Gad Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Av Gad sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and Av Gad

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

The idea behind Nasdaq Inc and Av Gad Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.