Correlation Between Nasdaq and Evotec SE
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Evotec SE 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 Evotec SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Evotec SE, you can compare the effects of market volatilities on Nasdaq and Evotec SE 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 Evotec SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Evotec SE.
Diversification Opportunities for Nasdaq and Evotec SE
Very good diversification
The 3 months correlation between Nasdaq and Evotec is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Evotec SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evotec SE 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 Evotec SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evotec SE has no effect on the direction of Nasdaq i.e., Nasdaq and Evotec SE go up and down completely randomly.
Pair Corralation between Nasdaq and Evotec SE
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.36 times more return on investment than Evotec SE. However, Nasdaq Inc is 2.74 times less risky than Evotec SE. It trades about 0.12 of its potential returns per unit of risk. Evotec SE is currently generating about -0.09 per unit of risk. If you would invest 4,981 in Nasdaq Inc on September 2, 2024 and sell it today you would earn a total of 3,318 from holding Nasdaq Inc or generate 66.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Nasdaq Inc vs. Evotec SE
Performance |
| Timeline |
| Nasdaq Inc |
| Evotec SE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nasdaq and Evotec SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Evotec SE
The main advantage of trading using opposite Nasdaq and Evotec SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Evotec SE 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 Evotec SE will offset losses from the drop in Evotec SE's long position.The idea behind Nasdaq Inc and Evotec SE 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.| Evotec SE vs. Pacira BioSciences, | Evotec SE vs. Collegium Pharmaceutical | Evotec SE vs. Prestige Brand Holdings | Evotec SE vs. Phibro Animal Health |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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