Correlation Between Nasdaq and Fair Oaks
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Fair Oaks 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 Fair Oaks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Fair Oaks Income, you can compare the effects of market volatilities on Nasdaq and Fair Oaks 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 Fair Oaks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Fair Oaks.
Diversification Opportunities for Nasdaq and Fair Oaks
Good diversification
The 3 months correlation between Nasdaq and Fair is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Fair Oaks Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Oaks Income 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 Fair Oaks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Oaks Income has no effect on the direction of Nasdaq i.e., Nasdaq and Fair Oaks go up and down completely randomly.
Pair Corralation between Nasdaq and Fair Oaks
Assuming the 90 days trading horizon Nasdaq Inc is expected to generate 15.06 times more return on investment than Fair Oaks. However, Nasdaq is 15.06 times more volatile than Fair Oaks Income. It trades about 0.04 of its potential returns per unit of risk. Fair Oaks Income is currently generating about 0.1 per unit of risk. If you would invest 5,903 in Nasdaq Inc on October 25, 2024 and sell it today you would earn a total of 2,138 from holding Nasdaq Inc or generate 36.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Nasdaq Inc vs. Fair Oaks Income
Performance |
| Timeline |
| Nasdaq Inc |
| Fair Oaks Income |
Nasdaq and Fair Oaks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Fair Oaks
The main advantage of trading using opposite Nasdaq and Fair Oaks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Fair Oaks 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 Fair Oaks will offset losses from the drop in Fair Oaks' long position.| Nasdaq vs. Roebuck Food Group | Nasdaq vs. Micron Technology | Nasdaq vs. Spotify Technology SA | Nasdaq vs. SMA Solar Technology |
| Fair Oaks vs. Toyota Motor Corp | Fair Oaks vs. SoftBank Group Corp | Fair Oaks vs. OTP Bank Nyrt | Fair Oaks vs. Agilent Technologies |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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