Correlation Between Nasdaq and KSM Mutual

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

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

Diversification Opportunities for Nasdaq and KSM Mutual

0.73

Correlation Coefficient

Nasdaq  KSM Mutual

Poor diversification

The 3 months correlation between Nasdaq and KSM is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and KSM Mutual Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSM Mutual Funds 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 KSM Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSM Mutual Funds has no effect on the direction of Nasdaq i.e., Nasdaq and KSM Mutual go up and down completely randomly.

Pair Corralation between Nasdaq and KSM Mutual

Given the investment horizon of 90 days Nasdaq is expected to generate 1.51 times less return on investment than KSM Mutual. But when comparing it to its historical volatility, Nasdaq Inc is 1.09 times less risky than KSM Mutual. It trades about 0.16 of its potential returns per unit of risk. KSM Mutual Funds is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  610,800  in KSM Mutual Funds on September 15, 2024 and sell it today you would earn a total of  23,500  from holding KSM Mutual Funds or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.71%
Values	Daily Returns

Nasdaq Inc  vs.  KSM Mutual Funds

Nasdaq Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 11 (%) 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.

KSM Mutual Funds

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KSM Mutual Funds are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, KSM Mutual may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nasdaq and KSM Mutual

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

The idea behind Nasdaq Inc and KSM Mutual Funds 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 Stocks Directory module to find actively traded stocks across global markets.