Correlation Between Nasdaq and Bankwell Financial
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Bankwell Financial 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 Bankwell Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Bankwell Financial Group, you can compare the effects of market volatilities on Nasdaq and Bankwell Financial 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 Bankwell Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Bankwell Financial.
Diversification Opportunities for Nasdaq and Bankwell Financial
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq and Bankwell is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Bankwell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankwell Financial 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 Bankwell Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankwell Financial has no effect on the direction of Nasdaq i.e., Nasdaq and Bankwell Financial go up and down completely randomly.
Pair Corralation between Nasdaq and Bankwell Financial
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.52 times more return on investment than Bankwell Financial. However, Nasdaq Inc is 1.92 times less risky than Bankwell Financial. It trades about 0.27 of its potential returns per unit of risk. Bankwell Financial Group is currently generating about 0.07 per unit of risk. If you would invest 7,743 in Nasdaq Inc on November 3, 2024 and sell it today you would earn a total of 491.00 from holding Nasdaq Inc or generate 6.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq Inc vs. Bankwell Financial Group
Performance |
| Timeline |
| Nasdaq Inc |
| Bankwell Financial |
Nasdaq and Bankwell Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Bankwell Financial
The main advantage of trading using opposite Nasdaq and Bankwell Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Bankwell Financial 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 Bankwell Financial will offset losses from the drop in Bankwell Financial's long position.The idea behind Nasdaq Inc and Bankwell Financial Group 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.| Bankwell Financial vs. Franklin Financial Services | Bankwell Financial vs. The First Bancshares, | Bankwell Financial vs. Home Federal Bancorp | Bankwell Financial vs. Lake Shore Bancorp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |