Correlation Between Nasdaq and Signify NV

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

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

Diversification Opportunities for Nasdaq and Signify NV

-0.52

Correlation Coefficient

Nasdaq  Signify NV

Excellent diversification

The 3 months correlation between Nasdaq and Signify is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Signify NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signify NV 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 Signify NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signify NV has no effect on the direction of Nasdaq i.e., Nasdaq and Signify NV go up and down completely randomly.

Pair Corralation between Nasdaq and Signify NV

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.54 times more return on investment than Signify NV. However, Nasdaq Inc is 1.86 times less risky than Signify NV. It trades about 0.15 of its potential returns per unit of risk. Signify NV is currently generating about -0.04 per unit of risk. If you would invest  7,308  in Nasdaq Inc on September 15, 2024 and sell it today you would earn a total of  704.00  from holding Nasdaq Inc or generate 9.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nasdaq Inc  vs.  Signify NV

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.

Signify NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Signify NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Signify NV is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nasdaq and Signify NV

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

The idea behind Nasdaq Inc and Signify NV 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.