Correlation Between Nasdaq 100 and Asure Software

Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Asure Software 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 100 and Asure Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 Total and Asure Software, you can compare the effects of market volatilities on Nasdaq 100 and Asure Software 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 100 with a short position of Asure Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Asure Software.

Diversification Opportunities for Nasdaq 100 and Asure Software

0.37

Correlation Coefficient

Nasdaq 100  Asure Software

Weak diversification

The 3 months correlation between Nasdaq and Asure is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Total and Asure Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asure Software and Nasdaq 100 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 100 Total are associated (or correlated) with Asure Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asure Software has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Asure Software go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Asure Software

Assuming the 90 days trading horizon Nasdaq 100 Total is expected to generate 0.34 times more return on investment than Asure Software. However, Nasdaq 100 Total is 2.92 times less risky than Asure Software. It trades about 0.11 of its potential returns per unit of risk. Asure Software is currently generating about 0.03 per unit of risk. If you would invest  2,418,336  in Nasdaq 100 Total on September 30, 2024 and sell it today you would earn a total of  174,817  from holding Nasdaq 100 Total or generate 7.23% return on investment over 90 days.

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

Nasdaq 100 Total  vs.  Asure Software

Pair Trading with Nasdaq 100 and Asure Software

The main advantage of trading using opposite Nasdaq 100 and Asure Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Asure Software 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 Asure Software will offset losses from the drop in Asure Software's long position.

The idea behind Nasdaq 100 Total and Asure Software 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.