Correlation Between Nasdaq and FactSet Research
Can any of the company-specific risk be diversified away by investing in both Nasdaq and FactSet Research 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 FactSet Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and FactSet Research Systems, you can compare the effects of market volatilities on Nasdaq and FactSet Research 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 FactSet Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and FactSet Research.
Diversification Opportunities for Nasdaq and FactSet Research
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nasdaq and FactSet is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and FactSet Research Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FactSet Research Systems 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 FactSet Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FactSet Research Systems has no effect on the direction of Nasdaq i.e., Nasdaq and FactSet Research go up and down completely randomly.
Pair Corralation between Nasdaq and FactSet Research
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.9 times more return on investment than FactSet Research. However, Nasdaq Inc is 1.11 times less risky than FactSet Research. It trades about 0.36 of its potential returns per unit of risk. FactSet Research Systems is currently generating about 0.17 per unit of risk. If you would invest 7,391 in Nasdaq Inc on August 24, 2024 and sell it today you would earn a total of 697.00 from holding Nasdaq Inc or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq Inc vs. FactSet Research Systems
Performance |
| Timeline |
| Nasdaq Inc |
| FactSet Research Systems |
Nasdaq and FactSet Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and FactSet Research
The main advantage of trading using opposite Nasdaq and FactSet Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, FactSet Research 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 FactSet Research will offset losses from the drop in FactSet Research's long position.The idea behind Nasdaq Inc and FactSet Research Systems 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.| FactSet Research vs. Dun Bradstreet Holdings | FactSet Research vs. Intercontinental Exchange | FactSet Research vs. SP Global | FactSet Research vs. Nasdaq Inc |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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