Two Equities Correlation Analysis
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NDAQ
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This model provides you with a quick lookup of cross correlation between two equities. Please specify two instruments to run the correlation.
Diversification Opportunities for Nasdaq and NYSE Composite
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq and NYSE is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite 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 NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Nasdaq i.e., Nasdaq and NYSE Composite go up and down completely randomly.
Pair Corralation between Nasdaq and NYSE Composite
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 1.61 times more return on investment than NYSE Composite. However, Nasdaq is 1.61 times more volatile than NYSE Composite. It trades about -0.03 of its potential returns per unit of risk. NYSE Composite is currently generating about -0.07 per unit of risk. If you would invest 6,214 in Nasdaq Inc on February 7, 2024 and sell it today you would lose (54.00) from holding Nasdaq Inc or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq Inc vs. NYSE Composite
Performance |
| Timeline |
Nasdaq and NYSE Composite Volatility Contrast
Predicted Return Density |
| Returns |
Nasdaq Inc
Pair trading matchups for Nasdaq
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Nasdaq and NYSE Composite
The main advantage of trading using opposite Nasdaq and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.The idea behind Nasdaq Inc and NYSE Composite 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.| NYSE Composite vs. ServiceNow | NYSE Composite vs. AMCON Distributing | NYSE Composite vs. National CineMedia | NYSE Composite vs. BOS Better Online |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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