Correlation Between Nasdaq and GREENLIGHT CAP
Can any of the company-specific risk be diversified away by investing in both Nasdaq and GREENLIGHT CAP 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 GREENLIGHT CAP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and GREENLIGHT CAP RE, you can compare the effects of market volatilities on Nasdaq and GREENLIGHT CAP 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 GREENLIGHT CAP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and GREENLIGHT CAP.
Diversification Opportunities for Nasdaq and GREENLIGHT CAP
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq and GREENLIGHT is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and GREENLIGHT CAP RE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENLIGHT CAP RE 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 GREENLIGHT CAP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENLIGHT CAP RE has no effect on the direction of Nasdaq i.e., Nasdaq and GREENLIGHT CAP go up and down completely randomly.
Pair Corralation between Nasdaq and GREENLIGHT CAP
Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the GREENLIGHT CAP. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 1.1 times less risky than GREENLIGHT CAP. The stock trades about -0.27 of its potential returns per unit of risk. The GREENLIGHT CAP RE is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 1,400 in GREENLIGHT CAP RE on October 12, 2024 and sell it today you would lose (50.00) from holding GREENLIGHT CAP RE or give up 3.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 90.0% |
| Values | Daily Returns |
Nasdaq Inc vs. GREENLIGHT CAP RE
Performance |
| Timeline |
| Nasdaq Inc |
| GREENLIGHT CAP RE |
Nasdaq and GREENLIGHT CAP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and GREENLIGHT CAP
The main advantage of trading using opposite Nasdaq and GREENLIGHT CAP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, GREENLIGHT CAP 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 GREENLIGHT CAP will offset losses from the drop in GREENLIGHT CAP's long position.The idea behind Nasdaq Inc and GREENLIGHT CAP RE 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.| GREENLIGHT CAP vs. TITANIUM TRANSPORTGROUP | GREENLIGHT CAP vs. Liberty Broadband | GREENLIGHT CAP vs. UNITED RENTALS | GREENLIGHT CAP vs. Texas Roadhouse |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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