Correlation Between Nasdaq and Nova Fund

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Can any of the company-specific risk be diversified away by investing in both Nasdaq and Nova Fund 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 Nova Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Nova Fund Class, you can compare the effects of market volatilities on Nasdaq and Nova Fund 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 Nova Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Nova Fund.

Diversification Opportunities for Nasdaq and Nova Fund

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Nasdaq and Nova is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Nova Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Fund Class 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 Nova Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Fund Class has no effect on the direction of Nasdaq i.e., Nasdaq and Nova Fund go up and down completely randomly.

Pair Corralation between Nasdaq and Nova Fund

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.9 times more return on investment than Nova Fund. However, Nasdaq Inc is 1.11 times less risky than Nova Fund. It trades about 0.08 of its potential returns per unit of risk. Nova Fund Class is currently generating about 0.06 per unit of risk. If you would invest  7,379  in Nasdaq Inc on September 21, 2024 and sell it today you would earn a total of  391.00  from holding Nasdaq Inc or generate 5.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Nasdaq Inc  vs.  Nova Fund Class

 Performance 
       Timeline  
Nasdaq Inc 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
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.
Nova Fund Class 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Nova Fund Class are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nova Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nasdaq and Nova Fund Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nasdaq and Nova Fund

The main advantage of trading using opposite Nasdaq and Nova Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Nova Fund 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 Nova Fund will offset losses from the drop in Nova Fund's long position.
The idea behind Nasdaq Inc and Nova Fund Class 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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