Correlation Between FactSet Research and Nasdaq
Can any of the company-specific risk be diversified away by investing in both FactSet Research and Nasdaq 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 FactSet Research and Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FactSet Research Systems and Nasdaq Inc, you can compare the effects of market volatilities on FactSet Research and Nasdaq 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 FactSet Research with a short position of Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of FactSet Research and Nasdaq.
Diversification Opportunities for FactSet Research and Nasdaq
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FactSet and Nasdaq is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding FactSet Research Systems and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc and FactSet Research 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 FactSet Research Systems are associated (or correlated) with Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of FactSet Research i.e., FactSet Research and Nasdaq go up and down completely randomly.
Pair Corralation between FactSet Research and Nasdaq
Considering the 90-day investment horizon FactSet Research Systems is expected to under-perform the Nasdaq. But the stock apears to be less risky and, when comparing its historical volatility, FactSet Research Systems is 1.4 times less risky than Nasdaq. The stock trades about -0.33 of its potential returns per unit of risk. The Nasdaq Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,738 in Nasdaq Inc on October 20, 2024 and sell it today you would earn a total of 145.00 from holding Nasdaq Inc or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FactSet Research Systems vs. Nasdaq Inc
Performance |
| Timeline |
| FactSet Research Systems |
| Nasdaq Inc |
FactSet Research and Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FactSet Research and Nasdaq
The main advantage of trading using opposite FactSet Research and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FactSet Research position performs unexpectedly, Nasdaq 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 Nasdaq will offset losses from the drop in Nasdaq's long position.| FactSet Research vs. Dun Bradstreet Holdings | FactSet Research vs. Moodys | FactSet Research vs. MSCI Inc | FactSet Research vs. Intercontinental Exchange |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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