Correlation Between Investment Managers and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both Investment Managers 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 Investment Managers and Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment Managers Series and Nasdaq 100 Index Fund, you can compare the effects of market volatilities on Investment Managers 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 Investment Managers with a short position of Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment Managers and Nasdaq 100.
Diversification Opportunities for Investment Managers and Nasdaq 100
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Investment and Nasdaq is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Investment Managers Series 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 and Investment Managers 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 Investment Managers Series 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 Index has no effect on the direction of Investment Managers i.e., Investment Managers and Nasdaq 100 go up and down completely randomly.
Pair Corralation between Investment Managers and Nasdaq 100
Assuming the 90 days horizon Investment Managers is expected to generate 2.6 times less return on investment than Nasdaq 100. In addition to that, Investment Managers is 1.46 times more volatile than Nasdaq 100 Index Fund. It trades about 0.02 of its total potential returns per unit of risk. Nasdaq 100 Index Fund is currently generating about 0.08 per unit of volatility. If you would invest 4,664 in Nasdaq 100 Index Fund on September 1, 2024 and sell it today you would earn a total of 598.00 from holding Nasdaq 100 Index Fund or generate 12.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Investment Managers Series vs. Nasdaq 100 Index Fund
Performance |
| Timeline |
| Investment Managers |
| Nasdaq 100 Index |
Investment Managers and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment Managers and Nasdaq 100
The main advantage of trading using opposite Investment Managers and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment Managers 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.| Investment Managers vs. Ep Emerging Markets | Investment Managers vs. Europac International Bond | Investment Managers vs. Europac International Dividend | Investment Managers vs. Ep Emerging Markets |
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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 the CEOs Directory module to screen CEOs from public companies around the world.
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