Correlation Between Nasdaq and KLX
Can any of the company-specific risk be diversified away by investing in both Nasdaq and KLX 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 KLX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and KLX Inc, you can compare the effects of market volatilities on Nasdaq and KLX 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 KLX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and KLX.
Diversification Opportunities for Nasdaq and KLX
Pay attention - limited upside
The 3 months correlation between Nasdaq and KLX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and KLX Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLX Inc 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 KLX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLX Inc has no effect on the direction of Nasdaq i.e., Nasdaq and KLX go up and down completely randomly.
Pair Corralation between Nasdaq and KLX
If you would invest 5,498 in Nasdaq Inc on September 14, 2024 and sell it today you would earn a total of 2,538 from holding Nasdaq Inc or generate 46.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Nasdaq Inc vs. KLX Inc
Performance |
| Timeline |
| Nasdaq Inc |
| KLX Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nasdaq and KLX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and KLX
The main advantage of trading using opposite Nasdaq and KLX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, KLX 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 KLX will offset losses from the drop in KLX's long position.The idea behind Nasdaq Inc and KLX Inc 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.| KLX vs. Bassett Furniture Industries | KLX vs. Haverty Furniture Companies | KLX vs. Boston Properties | KLX vs. Ambev SA ADR |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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