Correlation Between Nasdaq and Malibu Boats
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Malibu Boats 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 Malibu Boats into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Malibu Boats, you can compare the effects of market volatilities on Nasdaq and Malibu Boats 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 Malibu Boats. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Malibu Boats.
Diversification Opportunities for Nasdaq and Malibu Boats
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq and Malibu is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Malibu Boats in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malibu Boats 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 Malibu Boats. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malibu Boats has no effect on the direction of Nasdaq i.e., Nasdaq and Malibu Boats go up and down completely randomly.
Pair Corralation between Nasdaq and Malibu Boats
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.32 times more return on investment than Malibu Boats. However, Nasdaq Inc is 3.1 times less risky than Malibu Boats. It trades about 0.01 of its potential returns per unit of risk. Malibu Boats is currently generating about -0.01 per unit of risk. If you would invest 7,954 in Nasdaq Inc on September 18, 2024 and sell it today you would earn a total of 10.00 from holding Nasdaq Inc or generate 0.13% 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. Malibu Boats
Performance |
| Timeline |
| Nasdaq Inc |
| Malibu Boats |
Nasdaq and Malibu Boats Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Malibu Boats
The main advantage of trading using opposite Nasdaq and Malibu Boats positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Malibu Boats 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 Malibu Boats will offset losses from the drop in Malibu Boats' long position.The idea behind Nasdaq Inc and Malibu Boats 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.| Malibu Boats vs. Polaris Industries | Malibu Boats vs. MCBC Holdings | Malibu Boats vs. LCI Industries | Malibu Boats vs. Thor Industries |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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