Correlation Between Nasdaq and Atlas America
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Atlas America 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 Atlas America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Atlas America, you can compare the effects of market volatilities on Nasdaq and Atlas America 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 Atlas America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Atlas America.
Diversification Opportunities for Nasdaq and Atlas America
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nasdaq and Atlas is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Atlas America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas America 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 Atlas America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas America has no effect on the direction of Nasdaq i.e., Nasdaq and Atlas America go up and down completely randomly.
Pair Corralation between Nasdaq and Atlas America
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 4.06 times more return on investment than Atlas America. However, Nasdaq is 4.06 times more volatile than Atlas America. It trades about 0.08 of its potential returns per unit of risk. Atlas America is currently generating about 0.14 per unit of risk. If you would invest 7,963 in Nasdaq Inc on September 14, 2024 and sell it today you would earn a total of 124.00 from holding Nasdaq Inc or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Nasdaq Inc vs. Atlas America
Performance |
| Timeline |
| Nasdaq Inc |
| Atlas America |
Nasdaq and Atlas America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Atlas America
The main advantage of trading using opposite Nasdaq and Atlas America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Atlas America 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 Atlas America will offset losses from the drop in Atlas America's long position.The idea behind Nasdaq Inc and Atlas America 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.| Atlas America vs. Vanguard Total Stock | Atlas America vs. SPDR SP 500 | Atlas America vs. iShares Core SP | Atlas America vs. Vanguard Total Bond |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| CEOs Directory Screen CEOs from public companies around the world |