Correlation Between Nasdaq and Power Floating

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

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

Diversification Opportunities for Nasdaq and Power Floating

0.87

Correlation Coefficient

Nasdaq  Power Floating

Very poor diversification

The 3 months correlation between Nasdaq and Power is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Power Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Floating Rate 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 Power Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Floating Rate has no effect on the direction of Nasdaq i.e., Nasdaq and Power Floating go up and down completely randomly.

Pair Corralation between Nasdaq and Power Floating

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 14.62 times more return on investment than Power Floating. However, Nasdaq is 14.62 times more volatile than Power Floating Rate. It trades about 0.08 of its potential returns per unit of risk. Power Floating Rate is currently generating about 0.33 per unit of risk. If you would invest  7,379  in Nasdaq Inc on September 22, 2024 and sell it today you would earn a total of  359.00  from holding Nasdaq Inc or generate 4.87% return on investment over 90 days.

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

Nasdaq Inc  vs.  Power Floating Rate

Nasdaq Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Power Floating Rate

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Power Floating Rate are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Power Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq and Power Floating

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

The idea behind Nasdaq Inc and Power Floating Rate 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.