Correlation Between Nasdaq and Black Swan
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Black Swan 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 Black Swan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Black Swan Graphene, you can compare the effects of market volatilities on Nasdaq and Black Swan 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 Black Swan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Black Swan.
Diversification Opportunities for Nasdaq and Black Swan
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nasdaq and Black is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Black Swan Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Swan Graphene 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 Black Swan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Swan Graphene has no effect on the direction of Nasdaq i.e., Nasdaq and Black Swan go up and down completely randomly.
Pair Corralation between Nasdaq and Black Swan
Given the investment horizon of 90 days Nasdaq is expected to generate 1.45 times less return on investment than Black Swan. But when comparing it to its historical volatility, Nasdaq Inc is 7.94 times less risky than Black Swan. It trades about 0.12 of its potential returns per unit of risk. Black Swan Graphene is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Black Swan Graphene on September 2, 2024 and sell it today you would lose (8.11) from holding Black Swan Graphene or give up 57.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq Inc vs. Black Swan Graphene
Performance |
| Timeline |
| Nasdaq Inc |
| Black Swan Graphene |
Nasdaq and Black Swan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Black Swan
The main advantage of trading using opposite Nasdaq and Black Swan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Black Swan 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 Black Swan will offset losses from the drop in Black Swan's long position.The idea behind Nasdaq Inc and Black Swan Graphene 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.| Black Swan vs. Altech Batteries Limited | Black Swan vs. Asahi Kaisei Corp | Black Swan vs. Flameret | Black Swan vs. Alumifuel Pwr Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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