Correlation Between Nasdaq and Ethema Health
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Ethema Health 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 Ethema Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Ethema Health Corp, you can compare the effects of market volatilities on Nasdaq and Ethema Health 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 Ethema Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Ethema Health.
Diversification Opportunities for Nasdaq and Ethema Health
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nasdaq and Ethema is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Ethema Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethema Health Corp 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 Ethema Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethema Health Corp has no effect on the direction of Nasdaq i.e., Nasdaq and Ethema Health go up and down completely randomly.
Pair Corralation between Nasdaq and Ethema Health
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.11 times more return on investment than Ethema Health. However, Nasdaq Inc is 9.1 times less risky than Ethema Health. It trades about 0.39 of its potential returns per unit of risk. Ethema Health Corp is currently generating about -0.21 per unit of risk. If you would invest 7,589 in Nasdaq Inc on August 30, 2024 and sell it today you would earn a total of 716.00 from holding Nasdaq Inc or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq Inc vs. Ethema Health Corp
Performance |
| Timeline |
| Nasdaq Inc |
| Ethema Health Corp |
Nasdaq and Ethema Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Ethema Health
The main advantage of trading using opposite Nasdaq and Ethema Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Ethema Health 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 Ethema Health will offset losses from the drop in Ethema Health's long position.The idea behind Nasdaq Inc and Ethema Health Corp 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.| Ethema Health vs. PayPal Holdings | Ethema Health vs. Nasdaq Inc | Ethema Health vs. Choice Hotels International | Ethema Health vs. Microsoft |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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