Correlation Between Fednat Holding and Nasdaq

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

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

Diversification Opportunities for Fednat Holding and Nasdaq

-0.31

Correlation Coefficient

Fednat Holding  Nasdaq

Very good diversification

The 3 months correlation between Fednat and Nasdaq is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fednat Holding Co and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc and Fednat Holding 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 Fednat Holding Co 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 Fednat Holding i.e., Fednat Holding and Nasdaq go up and down completely randomly.

Pair Corralation between Fednat Holding and Nasdaq

If you would invest  0.16  in Fednat Holding Co on January 20, 2024 and sell it today you would earn a total of  0.00  from holding Fednat Holding Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Fednat Holding Co  vs.  Nasdaq Inc

Fednat Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fednat Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Fednat Holding 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

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 4 (%) 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 latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Fednat Holding and Nasdaq

The main advantage of trading using opposite Fednat Holding and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fednat Holding 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 Fednat Holding Co 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.