Correlation Between Nasdaq and Federated Global
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Federated Global 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 Federated Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Federated Global Allocation, you can compare the effects of market volatilities on Nasdaq and Federated Global 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 Federated Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Federated Global.
Diversification Opportunities for Nasdaq and Federated Global
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq and Federated is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Federated Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Global All 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 Federated Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Global All has no effect on the direction of Nasdaq i.e., Nasdaq and Federated Global go up and down completely randomly.
Pair Corralation between Nasdaq and Federated Global
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 2.3 times more return on investment than Federated Global. However, Nasdaq is 2.3 times more volatile than Federated Global Allocation. It trades about 0.12 of its potential returns per unit of risk. Federated Global Allocation is currently generating about 0.08 per unit of risk. If you would invest 4,852 in Nasdaq Inc on September 12, 2024 and sell it today you would earn a total of 3,191 from holding Nasdaq Inc or generate 65.77% 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. Federated Global Allocation
Performance |
| Timeline |
| Nasdaq Inc |
| Federated Global All |
Nasdaq and Federated Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Federated Global
The main advantage of trading using opposite Nasdaq and Federated Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Federated Global 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 Federated Global will offset losses from the drop in Federated Global's long position.The idea behind Nasdaq Inc and Federated Global Allocation 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.| Federated Global vs. Hennessy Bp Energy | Federated Global vs. Firsthand Alternative Energy | Federated Global vs. Oil Gas Ultrasector | Federated Global vs. Clearbridge Energy Mlp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |