Correlation Between Nasdaq and Voya Russelltm

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

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

Diversification Opportunities for Nasdaq and Voya Russelltm

0.89

Correlation Coefficient

Nasdaq  Voya Russelltm

Very poor diversification

The 3 months correlation between Nasdaq and Voya is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Voya Russelltm Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Russelltm Large 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 Voya Russelltm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Russelltm Large has no effect on the direction of Nasdaq i.e., Nasdaq and Voya Russelltm go up and down completely randomly.

Pair Corralation between Nasdaq and Voya Russelltm

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 1.26 times more return on investment than Voya Russelltm. However, Nasdaq is 1.26 times more volatile than Voya Russelltm Large. It trades about 0.09 of its potential returns per unit of risk. Voya Russelltm Large is currently generating about 0.11 per unit of risk. If you would invest  7,345  in Nasdaq Inc on September 24, 2024 and sell it today you would earn a total of  423.50  from holding Nasdaq Inc or generate 5.77% 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.  Voya Russelltm Large

Nasdaq Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 7 (%) 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.

Voya Russelltm Large

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Russelltm Large are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Voya Russelltm 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 Voya Russelltm

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

The idea behind Nasdaq Inc and Voya Russelltm Large 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.