Correlation Between Nasdaq and Aerofoam Metals
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Aerofoam Metals 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 Aerofoam Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Aerofoam Metals, you can compare the effects of market volatilities on Nasdaq and Aerofoam Metals 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 Aerofoam Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Aerofoam Metals.
Diversification Opportunities for Nasdaq and Aerofoam Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nasdaq and Aerofoam is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Aerofoam Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerofoam Metals 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 Aerofoam Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerofoam Metals has no effect on the direction of Nasdaq i.e., Nasdaq and Aerofoam Metals go up and down completely randomly.
Pair Corralation between Nasdaq and Aerofoam Metals
Given the investment horizon of 90 days Nasdaq is expected to generate 53.4 times less return on investment than Aerofoam Metals. But when comparing it to its historical volatility, Nasdaq Inc is 41.68 times less risky than Aerofoam Metals. It trades about 0.05 of its potential returns per unit of risk. Aerofoam Metals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Aerofoam Metals on September 3, 2024 and sell it today you would earn a total of 0.01 from holding Aerofoam Metals or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Nasdaq Inc vs. Aerofoam Metals
Performance |
| Timeline |
| Nasdaq Inc |
| Aerofoam Metals |
Nasdaq and Aerofoam Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Aerofoam Metals
The main advantage of trading using opposite Nasdaq and Aerofoam Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Aerofoam Metals 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 Aerofoam Metals will offset losses from the drop in Aerofoam Metals' long position.The idea behind Nasdaq Inc and Aerofoam Metals 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.| Aerofoam Metals vs. Jutal Offshore Oil | Aerofoam Metals vs. Nasdaq Inc | Aerofoam Metals vs. Western Acquisition Ventures | Aerofoam Metals vs. Sabra Healthcare REIT |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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