Correlation Between Intercontinental and Nasdaq
Can any of the company-specific risk be diversified away by investing in both Intercontinental 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 Intercontinental and Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intercontinental Exchange and Nasdaq Inc, you can compare the effects of market volatilities on Intercontinental 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 Intercontinental with a short position of Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intercontinental and Nasdaq.
Diversification Opportunities for Intercontinental and Nasdaq
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intercontinental and Nasdaq is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Intercontinental Exchange and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc and Intercontinental 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 Intercontinental Exchange 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 Intercontinental i.e., Intercontinental and Nasdaq go up and down completely randomly.
Pair Corralation between Intercontinental and Nasdaq
Considering the 90-day investment horizon Intercontinental is expected to generate 2.92 times less return on investment than Nasdaq. In addition to that, Intercontinental is 1.02 times more volatile than Nasdaq Inc. It trades about 0.06 of its total potential returns per unit of risk. Nasdaq Inc is currently generating about 0.17 per unit of volatility. If you would invest 7,410 in Nasdaq Inc on November 1, 2024 and sell it today you would earn a total of 819.00 from holding Nasdaq Inc or generate 11.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intercontinental Exchange vs. Nasdaq Inc
Performance |
| Timeline |
| Intercontinental Exchange |
| Nasdaq Inc |
Intercontinental and Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intercontinental and Nasdaq
The main advantage of trading using opposite Intercontinental and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intercontinental 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.| Intercontinental vs. Nasdaq Inc | Intercontinental vs. SP Global | Intercontinental vs. Moodys | Intercontinental vs. FactSet Research Systems |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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