Correlation Between Nasdaq and Burckhardt Compression

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

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

Diversification Opportunities for Nasdaq and Burckhardt Compression

0.78

Correlation Coefficient

Nasdaq  Burckhardt Compression

Poor diversification

The 3 months correlation between Nasdaq and Burckhardt is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Burckhardt Compression in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burckhardt Compression 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 Burckhardt Compression. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burckhardt Compression has no effect on the direction of Nasdaq i.e., Nasdaq and Burckhardt Compression go up and down completely randomly.

Pair Corralation between Nasdaq and Burckhardt Compression

Given the investment horizon of 90 days Nasdaq is expected to generate 1.17 times less return on investment than Burckhardt Compression. But when comparing it to its historical volatility, Nasdaq Inc is 1.4 times less risky than Burckhardt Compression. It trades about 0.16 of its potential returns per unit of risk. Burckhardt Compression is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  58,400  in Burckhardt Compression on September 14, 2024 and sell it today you would earn a total of  6,800  from holding Burckhardt Compression or generate 11.64% return on investment over 90 days.

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

Nasdaq Inc  vs.  Burckhardt Compression

Nasdaq Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 12 (%) 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.

Burckhardt Compression

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Burckhardt Compression are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Burckhardt Compression may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nasdaq and Burckhardt Compression

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

The idea behind Nasdaq Inc and Burckhardt Compression 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.