Correlation Between Nasdaq and Ladenburg Thalmann
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Ladenburg Thalmann 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 Ladenburg Thalmann into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Ladenburg Thalmann Financial, you can compare the effects of market volatilities on Nasdaq and Ladenburg Thalmann 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 Ladenburg Thalmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Ladenburg Thalmann.
Diversification Opportunities for Nasdaq and Ladenburg Thalmann
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq and Ladenburg is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Ladenburg Thalmann Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladenburg Thalmann 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 Ladenburg Thalmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladenburg Thalmann has no effect on the direction of Nasdaq i.e., Nasdaq and Ladenburg Thalmann go up and down completely randomly.
Pair Corralation between Nasdaq and Ladenburg Thalmann
Given the investment horizon of 90 days Nasdaq is expected to generate 2.05 times less return on investment than Ladenburg Thalmann. But when comparing it to its historical volatility, Nasdaq Inc is 1.49 times less risky than Ladenburg Thalmann. It trades about 0.05 of its potential returns per unit of risk. Ladenburg Thalmann Financial is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,015 in Ladenburg Thalmann Financial on September 13, 2024 and sell it today you would earn a total of 585.00 from holding Ladenburg Thalmann Financial or generate 57.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 72.73% |
| Values | Daily Returns |
Nasdaq Inc vs. Ladenburg Thalmann Financial
Performance |
| Timeline |
| Nasdaq Inc |
| Ladenburg Thalmann |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nasdaq and Ladenburg Thalmann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Ladenburg Thalmann
The main advantage of trading using opposite Nasdaq and Ladenburg Thalmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Ladenburg Thalmann 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 Ladenburg Thalmann will offset losses from the drop in Ladenburg Thalmann's long position.The idea behind Nasdaq Inc and Ladenburg Thalmann Financial 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.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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