Correlation Between Nasdaq and EVe Mobility

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

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

Diversification Opportunities for Nasdaq and EVe Mobility

0.85

Correlation Coefficient

Nasdaq  EVe Mobility

Very poor diversification

The 3 months correlation between Nasdaq and EVe is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and EVe Mobility Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVe Mobility Acquisition 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 EVe Mobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVe Mobility Acquisition has no effect on the direction of Nasdaq i.e., Nasdaq and EVe Mobility go up and down completely randomly.

Pair Corralation between Nasdaq and EVe Mobility

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 3.92 times more return on investment than EVe Mobility. However, Nasdaq is 3.92 times more volatile than EVe Mobility Acquisition. It trades about 0.06 of its potential returns per unit of risk. EVe Mobility Acquisition is currently generating about 0.05 per unit of risk. If you would invest  7,942  in Nasdaq Inc on September 12, 2024 and sell it today you would earn a total of  101.00  from holding Nasdaq Inc or generate 1.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Nasdaq Inc  vs.  EVe Mobility Acquisition

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.

EVe Mobility Acquisition

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EVe Mobility Acquisition are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, EVe Mobility is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nasdaq and EVe Mobility

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

The idea behind Nasdaq Inc and EVe Mobility Acquisition 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.