Correlation Between Associated Capital and Nasdaq

Can any of the company-specific risk be diversified away by investing in both Associated Capital and Nasdaq 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 Associated Capital and Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associated Capital Group and Nasdaq Inc, you can compare the effects of market volatilities on Associated Capital and Nasdaq 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 Associated Capital with a short position of Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Nasdaq.

Diversification Opportunities for Associated Capital and Nasdaq

-0.43

Correlation Coefficient

Associated Capital  Nasdaq

Very good diversification

The 3 months correlation between Associated and Nasdaq is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc and Associated Capital 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 Associated Capital Group are associated (or correlated) with Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of Associated Capital i.e., Associated Capital and Nasdaq go up and down completely randomly.

Pair Corralation between Associated Capital and Nasdaq

Allowing for the 90-day total investment horizon Associated Capital Group is expected to generate 0.59 times more return on investment than Nasdaq. However, Associated Capital Group is 1.7 times less risky than Nasdaq. It trades about -0.02 of its potential returns per unit of risk. Nasdaq Inc is currently generating about -0.13 per unit of risk. If you would invest  3,243  in Associated Capital Group on January 30, 2024 and sell it today you would lose (10.00) from holding Associated Capital Group or give up 0.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Associated Capital Group  vs.  Nasdaq Inc

Associated Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Associated Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Associated Capital is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Nasdaq Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Associated Capital and Nasdaq

The main advantage of trading using opposite Associated Capital and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital position performs unexpectedly, Nasdaq 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 Nasdaq will offset losses from the drop in Nasdaq's long position.

The idea behind Associated Capital Group and Nasdaq Inc 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.