Correlation Between Nasdaq and Orsted AS

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Can any of the company-specific risk be diversified away by investing in both Nasdaq and Orsted AS 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 Orsted AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Orsted AS, you can compare the effects of market volatilities on Nasdaq and Orsted AS 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 Orsted AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Orsted AS.

Diversification Opportunities for Nasdaq and Orsted AS

-0.81
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Nasdaq and Orsted is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Orsted AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted AS 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 Orsted AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted AS has no effect on the direction of Nasdaq i.e., Nasdaq and Orsted AS go up and down completely randomly.

Pair Corralation between Nasdaq and Orsted AS

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.59 times more return on investment than Orsted AS. However, Nasdaq Inc is 1.7 times less risky than Orsted AS. It trades about -0.13 of its potential returns per unit of risk. Orsted AS is currently generating about -0.37 per unit of risk. If you would invest  8,128  in Nasdaq Inc on September 25, 2024 and sell it today you would lose (236.00) from holding Nasdaq Inc or give up 2.9% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Nasdaq Inc  vs.  Orsted AS

 Performance 
       Timeline  
Nasdaq Inc 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Orsted AS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Orsted AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Nasdaq and Orsted AS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nasdaq and Orsted AS

The main advantage of trading using opposite Nasdaq and Orsted AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Orsted AS 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 Orsted AS will offset losses from the drop in Orsted AS's long position.
The idea behind Nasdaq Inc and Orsted AS 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.
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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