Correlation Between Nasdaq and ExcelFin Acquisition

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

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

Diversification Opportunities for Nasdaq and ExcelFin Acquisition

-0.26

Correlation Coefficient

Nasdaq  ExcelFin Acquisition

Very good diversification

The 3 months correlation between Nasdaq and ExcelFin is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and ExcelFin Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExcelFin Acquisition Corp 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 ExcelFin Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExcelFin Acquisition Corp has no effect on the direction of Nasdaq i.e., Nasdaq and ExcelFin Acquisition go up and down completely randomly.

Pair Corralation between Nasdaq and ExcelFin Acquisition

Given the investment horizon of 90 days Nasdaq is expected to generate 122.3 times less return on investment than ExcelFin Acquisition. But when comparing it to its historical volatility, Nasdaq Inc is 50.76 times less risky than ExcelFin Acquisition. It trades about 0.15 of its potential returns per unit of risk. ExcelFin Acquisition Corp is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  3.50  in ExcelFin Acquisition Corp on September 16, 2024 and sell it today you would earn a total of  3.50  from holding ExcelFin Acquisition Corp or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	13.85%
Values	Daily Returns

Nasdaq Inc  vs.  ExcelFin Acquisition Corp

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.

ExcelFin Acquisition Corp

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days ExcelFin Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, ExcelFin Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and ExcelFin Acquisition

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

The idea behind Nasdaq Inc and ExcelFin Acquisition Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.