Correlation Between Nasdaq and Tectonic Metals
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Tectonic Metals 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 Tectonic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Tectonic Metals, you can compare the effects of market volatilities on Nasdaq and Tectonic Metals 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 Tectonic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Tectonic Metals.
Diversification Opportunities for Nasdaq and Tectonic Metals
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nasdaq and Tectonic is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Tectonic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic Metals 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 Tectonic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Metals has no effect on the direction of Nasdaq i.e., Nasdaq and Tectonic Metals go up and down completely randomly.
Pair Corralation between Nasdaq and Tectonic Metals
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.24 times more return on investment than Tectonic Metals. However, Nasdaq Inc is 4.13 times less risky than Tectonic Metals. It trades about 0.07 of its potential returns per unit of risk. Tectonic Metals is currently generating about 0.0 per unit of risk. If you would invest 5,295 in Nasdaq Inc on November 27, 2024 and sell it today you would earn a total of 2,699 from holding Nasdaq Inc or generate 50.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq Inc vs. Tectonic Metals
Performance |
| Timeline |
| Nasdaq Inc |
| Tectonic Metals |
Nasdaq and Tectonic Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Tectonic Metals
The main advantage of trading using opposite Nasdaq and Tectonic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Tectonic Metals 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 Tectonic Metals will offset losses from the drop in Tectonic Metals' long position.The idea behind Nasdaq Inc and Tectonic Metals 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.| Tectonic Metals vs. Red Pine Exploration | Tectonic Metals vs. Grande Portage Resources | Tectonic Metals vs. Puma Exploration | Tectonic Metals vs. Aurion Resources |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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