Correlation Between Nasdaq and Riverpark Strategic

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

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

Diversification Opportunities for Nasdaq and Riverpark Strategic

0.82

Correlation Coefficient

Nasdaq  Riverpark Strategic

Very poor diversification

The 3 months correlation between Nasdaq and Riverpark is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Riverpark Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riverpark Strategic 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 Riverpark Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riverpark Strategic has no effect on the direction of Nasdaq i.e., Nasdaq and Riverpark Strategic go up and down completely randomly.

Pair Corralation between Nasdaq and Riverpark Strategic

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 10.99 times more return on investment than Riverpark Strategic. However, Nasdaq is 10.99 times more volatile than Riverpark Strategic Income. It trades about 0.16 of its potential returns per unit of risk. Riverpark Strategic Income is currently generating about 0.21 per unit of risk. If you would invest  6,159  in Nasdaq Inc on September 13, 2024 and sell it today you would earn a total of  1,928  from holding Nasdaq Inc or generate 31.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.32%
Values	Daily Returns

Nasdaq Inc  vs.  Riverpark Strategic Income

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.

Riverpark Strategic

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Riverpark Strategic Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Riverpark Strategic 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 Riverpark Strategic

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

The idea behind Nasdaq Inc and Riverpark Strategic Income 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.