Correlation Between Nasdaq and Olema Pharmaceuticals

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

Diversification Opportunities for Nasdaq and Olema Pharmaceuticals

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Nasdaq and Olema is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Olema Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olema Pharmaceuticals 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 Olema Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olema Pharmaceuticals has no effect on the direction of Nasdaq i.e., Nasdaq and Olema Pharmaceuticals go up and down completely randomly.

Pair Corralation between Nasdaq and Olema Pharmaceuticals

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.31 times more return on investment than Olema Pharmaceuticals. However, Nasdaq Inc is 3.19 times less risky than Olema Pharmaceuticals. It trades about 0.12 of its potential returns per unit of risk. Olema Pharmaceuticals is currently generating about -0.03 per unit of risk. If you would invest  6,042  in Nasdaq Inc on September 3, 2022 and sell it today you would earn a total of  856.00  from holding Nasdaq Inc or generate 14.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.41%
ValuesDaily Returns

Nasdaq Inc  vs.  Olema Pharmaceuticals

 Performance (%) 
       Timeline  
Nasdaq Inc 
Nasdaq Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Nasdaq displayed solid returns over the last few months and may actually be approaching a breakup point.

Nasdaq Price Channel

Olema Pharmaceuticals 
Olema Performance
0 of 100
Over the last 90 days Olema Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Olema Price Channel

Nasdaq and Olema Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nasdaq and Olema Pharmaceuticals

The main advantage of trading using opposite Nasdaq and Olema Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Olema Pharmaceuticals 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 Olema Pharmaceuticals will offset losses from the drop in Olema Pharmaceuticals' long position.
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The idea behind Nasdaq Inc and Olema Pharmaceuticals 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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