Correlation Between National Tax and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both National Tax and Nasdaq 100 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 National Tax and Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The National Tax Free and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on National Tax and Nasdaq 100 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 National Tax with a short position of Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Tax and Nasdaq 100.
Diversification Opportunities for National Tax and Nasdaq 100
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Nasdaq is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x and National Tax 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 The National Tax Free are associated (or correlated) with Nasdaq 100. 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 2x has no effect on the direction of National Tax i.e., National Tax and Nasdaq 100 go up and down completely randomly.
Pair Corralation between National Tax and Nasdaq 100
Assuming the 90 days horizon National Tax is expected to generate 5.78 times less return on investment than Nasdaq 100. But when comparing it to its historical volatility, The National Tax Free is 19.61 times less risky than Nasdaq 100. It trades about 0.55 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 42,463 in Nasdaq 100 2x Strategy on September 13, 2024 and sell it today you would earn a total of 2,549 from holding Nasdaq 100 2x Strategy or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The National Tax Free vs. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| National Tax |
| Nasdaq 100 2x |
National Tax and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Tax and Nasdaq 100
The main advantage of trading using opposite National Tax and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Tax position performs unexpectedly, Nasdaq 100 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 will offset losses from the drop in Nasdaq 100's long position.| National Tax vs. The Missouri Tax Free | National Tax vs. The Bond Fund | National Tax vs. High Yield Municipal Fund | National Tax vs. Fidelity Intermediate Municipal |
| Nasdaq 100 vs. Lgm Risk Managed | Nasdaq 100 vs. Franklin High Income | Nasdaq 100 vs. Alliancebernstein Global High | Nasdaq 100 vs. Artisan High Income |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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