Correlation Between Nasdaq and FEDEX
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By analyzing existing cross correlation between Nasdaq Inc and FEDEX P 42, you can compare the effects of market volatilities on Nasdaq and FEDEX 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 FEDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and FEDEX.
Diversification Opportunities for Nasdaq and FEDEX
Very good diversification
The 3 months correlation between Nasdaq and FEDEX is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and FEDEX P 42 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEDEX P 42 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 FEDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEDEX P 42 has no effect on the direction of Nasdaq i.e., Nasdaq and FEDEX go up and down completely randomly.
Pair Corralation between Nasdaq and FEDEX
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 1.4 times more return on investment than FEDEX. However, Nasdaq is 1.4 times more volatile than FEDEX P 42. It trades about 0.05 of its potential returns per unit of risk. FEDEX P 42 is currently generating about 0.01 per unit of risk. If you would invest 6,149 in Nasdaq Inc on August 30, 2024 and sell it today you would earn a total of 2,156 from holding Nasdaq Inc or generate 35.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Nasdaq Inc vs. FEDEX P 42
Performance |
| Timeline |
| Nasdaq Inc |
| FEDEX P 42 |
Nasdaq and FEDEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and FEDEX
The main advantage of trading using opposite Nasdaq and FEDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, FEDEX 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 FEDEX will offset losses from the drop in FEDEX's long position.The idea behind Nasdaq Inc and FEDEX P 42 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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