Correlation Between Qs Us and Nasdaq-100(r)
Can any of the company-specific risk be diversified away by investing in both Qs Us and Nasdaq-100(r) 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 Qs Us and Nasdaq-100(r) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qs Large Cap and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Qs Us and Nasdaq-100(r) 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 Qs Us with a short position of Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Us and Nasdaq-100(r).
Diversification Opportunities for Qs Us and Nasdaq-100(r)
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LMUSX and Nasdaq-100(r) is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Qs Large Cap 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 Qs Us 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 Qs Large Cap are associated (or correlated) with Nasdaq-100(r). 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 Qs Us i.e., Qs Us and Nasdaq-100(r) go up and down completely randomly.
Pair Corralation between Qs Us and Nasdaq-100(r)
Assuming the 90 days horizon Qs Large Cap is expected to generate 0.39 times more return on investment than Nasdaq-100(r). However, Qs Large Cap is 2.54 times less risky than Nasdaq-100(r). It trades about 0.25 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.09 per unit of risk. If you would invest 2,453 in Qs Large Cap on August 28, 2024 and sell it today you would earn a total of 119.00 from holding Qs Large Cap or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qs Large Cap vs. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| Qs Large Cap |
| Nasdaq 100 2x |
Qs Us and Nasdaq-100(r) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qs Us and Nasdaq-100(r)
The main advantage of trading using opposite Qs Us and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs Us position performs unexpectedly, Nasdaq-100(r) 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(r) will offset losses from the drop in Nasdaq-100(r)'s long position.| Qs Us vs. Pace Large Growth | Qs Us vs. Morningstar Unconstrained Allocation | Qs Us vs. Quantitative U S | Qs Us vs. Nuveen Winslow Large Cap |
| Nasdaq-100(r) vs. Evaluator Conservative Rms | Nasdaq-100(r) vs. Pioneer Diversified High | Nasdaq-100(r) vs. Calvert Conservative Allocation | Nasdaq-100(r) vs. Fidelity Advisor Diversified |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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