Correlation Between Tidewater and NASDAQ-100 INDEX

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Can any of the company-specific risk be diversified away by investing in both Tidewater and NASDAQ-100 INDEX 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 Tidewater and NASDAQ-100 INDEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tidewater and NASDAQ-100 INDEX FUND, you can compare the effects of market volatilities on Tidewater and NASDAQ-100 INDEX 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 Tidewater with a short position of NASDAQ-100 INDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tidewater and NASDAQ-100 INDEX.

Diversification Opportunities for Tidewater and NASDAQ-100 INDEX

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Tidewater and NASDAQ-100 is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Tidewater and NASDAQ-100 INDEX FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NASDAQ-100 INDEX FUND and Tidewater 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 Tidewater are associated (or correlated) with NASDAQ-100 INDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NASDAQ-100 INDEX FUND has no effect on the direction of Tidewater i.e., Tidewater and NASDAQ-100 INDEX go up and down completely randomly.

Pair Corralation between Tidewater and NASDAQ-100 INDEX

Considering the 90-day investment horizon Tidewater is expected to generate 1.74 times more return on investment than NASDAQ-100 INDEX. However, Tidewater is 1.74 times more volatile than NASDAQ-100 INDEX FUND. It trades about 0.17 of its potential returns per unit of risk. NASDAQ-100 INDEX FUND is currently generating about 0.09 per unit of risk. If you would invest  3,219  in Tidewater on November 2, 2022 and sell it today you would earn a total of  1,107  from holding Tidewater or generate 34.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Tidewater  vs.  NASDAQ-100 INDEX FUND

 Performance (%) 
       Timeline  
Tidewater 
Tidewater Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Tidewater are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Tidewater showed solid returns over the last few months and may actually be approaching a breakup point.

Tidewater Price Channel

NASDAQ-100 INDEX FUND 
NASDAQ-100 Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in NASDAQ-100 INDEX FUND are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, NASDAQ-100 INDEX may actually be approaching a critical reversion point that can send shares even higher in March 2023.

NASDAQ-100 Price Channel

Tidewater and NASDAQ-100 INDEX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tidewater and NASDAQ-100 INDEX

The main advantage of trading using opposite Tidewater and NASDAQ-100 INDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tidewater position performs unexpectedly, NASDAQ-100 INDEX 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-100 INDEX will offset losses from the drop in NASDAQ-100 INDEX's long position.
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The idea behind Tidewater and NASDAQ-100 INDEX FUND 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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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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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