Correlation Between Nasdaq and Hercules Metals
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Hercules Metals 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 Hercules Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Hercules Metals Corp, you can compare the effects of market volatilities on Nasdaq and Hercules Metals 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 Hercules Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Hercules Metals.
Diversification Opportunities for Nasdaq and Hercules Metals
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nasdaq and Hercules is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Hercules Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Metals Corp 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 Hercules Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Metals Corp has no effect on the direction of Nasdaq i.e., Nasdaq and Hercules Metals go up and down completely randomly.
Pair Corralation between Nasdaq and Hercules Metals
Given the investment horizon of 90 days Nasdaq is expected to generate 7.16 times less return on investment than Hercules Metals. But when comparing it to its historical volatility, Nasdaq Inc is 4.76 times less risky than Hercules Metals. It trades about 0.05 of its potential returns per unit of risk. Hercules Metals Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Hercules Metals Corp on September 23, 2024 and sell it today you would earn a total of 37.00 from holding Hercules Metals Corp or generate 217.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
Nasdaq Inc vs. Hercules Metals Corp
Performance |
Timeline |
Nasdaq Inc |
Hercules Metals Corp |
Nasdaq and Hercules Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nasdaq and Hercules Metals
The main advantage of trading using opposite Nasdaq and Hercules Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Hercules Metals 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 Hercules Metals will offset losses from the drop in Hercules Metals' long position.The idea behind Nasdaq Inc and Hercules Metals Corp 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.Hercules Metals vs. CI Financial Corp | Hercules Metals vs. Laurentian Bank | Hercules Metals vs. Canadian Imperial Bank | Hercules Metals vs. Talon Metals Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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