Correlation Between Nasdaq and Transportadora
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Transportadora 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 Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Transportadora de Gas, you can compare the effects of market volatilities on Nasdaq and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Transportadora.
Diversification Opportunities for Nasdaq and Transportadora
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq and Transportadora is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Nasdaq i.e., Nasdaq and Transportadora go up and down completely randomly.
Pair Corralation between Nasdaq and Transportadora
Given the investment horizon of 90 days Nasdaq is expected to generate 3.82 times less return on investment than Transportadora. But when comparing it to its historical volatility, Nasdaq Inc is 3.6 times less risky than Transportadora. It trades about 0.12 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 84,250 in Transportadora de Gas on September 12, 2024 and sell it today you would earn a total of 310,250 from holding Transportadora de Gas or generate 368.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.28% |
| Values | Daily Returns |
Nasdaq Inc vs. Transportadora de Gas
Performance |
| Timeline |
| Nasdaq Inc |
| Transportadora de Gas |
Nasdaq and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Transportadora
The main advantage of trading using opposite Nasdaq and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.The idea behind Nasdaq Inc and Transportadora de Gas 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.| Transportadora vs. Agrometal SAI | Transportadora vs. Transportadora de Gas | Transportadora vs. Harmony Gold Mining | Transportadora vs. Telecom Argentina |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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