Correlation Between Nasdaq and Global Green

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

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

Diversification Opportunities for Nasdaq and Global Green

-0.02

Correlation Coefficient

Nasdaq  Global Green

Good diversification

The 3 months correlation between Nasdaq and Global is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Global Green Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Green Chemicals 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 Global Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Green Chemicals has no effect on the direction of Nasdaq i.e., Nasdaq and Global Green go up and down completely randomly.

Pair Corralation between Nasdaq and Global Green

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.66 times more return on investment than Global Green. However, Nasdaq Inc is 1.51 times less risky than Global Green. It trades about 0.08 of its potential returns per unit of risk. Global Green Chemicals is currently generating about -0.01 per unit of risk. If you would invest  7,963  in Nasdaq Inc on September 14, 2024 and sell it today you would earn a total of  124.00  from holding Nasdaq Inc or generate 1.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Nasdaq Inc  vs.  Global Green Chemicals

Nasdaq Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 13 (%) 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.

Global Green Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Green Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Global Green is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Nasdaq and Global Green

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

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