Correlation Between FactSet Research and Nasdaq

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

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

Diversification Opportunities for FactSet Research and Nasdaq

-0.57

Correlation Coefficient

FactSet Research  Nasdaq

Excellent diversification

The 3 months correlation between FactSet and Nasdaq is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding FactSet Research Systems and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc and FactSet Research 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 FactSet Research Systems 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 FactSet Research i.e., FactSet Research and Nasdaq go up and down completely randomly.

Pair Corralation between FactSet Research and Nasdaq

Considering the 90-day investment horizon FactSet Research Systems is expected to under-perform the Nasdaq. In addition to that, FactSet Research is 1.16 times more volatile than Nasdaq Inc. It trades about -0.22 of its total potential returns per unit of risk. Nasdaq Inc is currently generating about -0.17 per unit of volatility. If you would invest  6,300  in Nasdaq Inc on January 27, 2024 and sell it today you would lose (271.00) from holding Nasdaq Inc or give up 4.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

FactSet Research Systems  vs.  Nasdaq Inc

FactSet Research Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FactSet Research Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Nasdaq Inc

Risk-Adjusted Performance

4 of 100

Modest

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 FactSet Research and Nasdaq

The main advantage of trading using opposite FactSet Research and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FactSet Research 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 FactSet Research Systems 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.