Correlation Between Health Care and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both Health Care 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 Health Care and Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Ultrasector and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Health Care 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 Health Care with a short position of Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Nasdaq 100.
Diversification Opportunities for Health Care and Nasdaq 100
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Health and Nasdaq is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Ultrasector 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 Health Care 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 Health Care Ultrasector 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 Health Care i.e., Health Care and Nasdaq 100 go up and down completely randomly.
Pair Corralation between Health Care and Nasdaq 100
Assuming the 90 days horizon Health Care Ultrasector is expected to under-perform the Nasdaq 100. But the mutual fund apears to be less risky and, when comparing its historical volatility, Health Care Ultrasector is 1.48 times less risky than Nasdaq 100. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Nasdaq 100 2x Strategy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 59,032 in Nasdaq 100 2x Strategy on September 13, 2024 and sell it today you would earn a total of 1,362 from holding Nasdaq 100 2x Strategy or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Ultrasector vs. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| Health Care Ultrasector |
| Nasdaq 100 2x |
Health Care and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Nasdaq 100
The main advantage of trading using opposite Health Care and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care 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.| Health Care vs. Dodge International Stock | Health Care vs. Us Strategic Equity | Health Care vs. Artisan Select Equity | Health Care vs. Qs Global Equity |
| Nasdaq 100 vs. Sp 500 2x | Nasdaq 100 vs. Inverse Nasdaq 100 2x | Nasdaq 100 vs. Inverse Sp 500 | Nasdaq 100 vs. Ultra Nasdaq 100 Profunds |
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.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |