Correlation Between Nasdaq and DEAP CAPITAL

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

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

Diversification Opportunities for Nasdaq and DEAP CAPITAL

-0.15

Correlation Coefficient

Nasdaq  DEAP CAPITAL

Good diversification

The 3 months correlation between Nasdaq and DEAP is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and DEAP CAPITAL MANAGEMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEAP CAPITAL MANAGEMENT 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 DEAP CAPITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEAP CAPITAL MANAGEMENT has no effect on the direction of Nasdaq i.e., Nasdaq and DEAP CAPITAL go up and down completely randomly.

Pair Corralation between Nasdaq and DEAP CAPITAL

Given the investment horizon of 90 days Nasdaq is expected to generate 2.79 times less return on investment than DEAP CAPITAL. But when comparing it to its historical volatility, Nasdaq Inc is 6.09 times less risky than DEAP CAPITAL. It trades about 0.18 of its potential returns per unit of risk. DEAP CAPITAL MANAGEMENT is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  93.00  in DEAP CAPITAL MANAGEMENT on September 13, 2024 and sell it today you would earn a total of  21.00  from holding DEAP CAPITAL MANAGEMENT or generate 22.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Nasdaq Inc  vs.  DEAP CAPITAL MANAGEMENT

Nasdaq Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 14 (%) 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.

DEAP CAPITAL MANAGEMENT

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DEAP CAPITAL MANAGEMENT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, DEAP CAPITAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and DEAP CAPITAL

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

The idea behind Nasdaq Inc and DEAP CAPITAL MANAGEMENT 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.