Correlation Between Nasdaq and Verisk Analytics
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Verisk Analytics 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 Verisk Analytics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Verisk Analytics, you can compare the effects of market volatilities on Nasdaq and Verisk Analytics 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 Verisk Analytics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Verisk Analytics.
Diversification Opportunities for Nasdaq and Verisk Analytics
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq and Verisk is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Verisk Analytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verisk Analytics 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 Verisk Analytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verisk Analytics has no effect on the direction of Nasdaq i.e., Nasdaq and Verisk Analytics go up and down completely randomly.
Pair Corralation between Nasdaq and Verisk Analytics
Given the investment horizon of 90 days Nasdaq is expected to generate 1.83 times less return on investment than Verisk Analytics. But when comparing it to its historical volatility, Nasdaq Inc is 1.3 times less risky than Verisk Analytics. It trades about 0.01 of its potential returns per unit of risk. Verisk Analytics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 26,622 in Verisk Analytics on September 18, 2024 and sell it today you would earn a total of 68.00 from holding Verisk Analytics or generate 0.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.45% |
Values | Daily Returns |
Nasdaq Inc vs. Verisk Analytics
Performance |
Timeline |
Nasdaq Inc |
Verisk Analytics |
Nasdaq and Verisk Analytics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nasdaq and Verisk Analytics
The main advantage of trading using opposite Nasdaq and Verisk Analytics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Verisk Analytics 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 Verisk Analytics will offset losses from the drop in Verisk Analytics' long position.The idea behind Nasdaq Inc and Verisk Analytics 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.Verisk Analytics vs. Automatic Data Processing | Verisk Analytics vs. Paychex | Verisk Analytics vs. Superior Plus Corp | Verisk Analytics vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
Global Correlations Find global opportunities by holding instruments from different markets | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |