Correlation Between Great-west and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both Great-west 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 Great-west and Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great West T Rowe and Nasdaq 100 Fund Class, you can compare the effects of market volatilities on Great-west 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 Great-west with a short position of Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west and Nasdaq 100.
Diversification Opportunities for Great-west and Nasdaq 100
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Great-west and Nasdaq is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Great West T Rowe and Nasdaq 100 Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Fund and Great-west 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 Great West T Rowe 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 Fund has no effect on the direction of Great-west i.e., Great-west and Nasdaq 100 go up and down completely randomly.
Pair Corralation between Great-west and Nasdaq 100
Assuming the 90 days horizon Great-west is expected to generate 1.86 times less return on investment than Nasdaq 100. But when comparing it to its historical volatility, Great West T Rowe is 1.65 times less risky than Nasdaq 100. It trades about 0.07 of its potential returns per unit of risk. Nasdaq 100 Fund Class is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,894 in Nasdaq 100 Fund Class on September 3, 2024 and sell it today you would earn a total of 2,829 from holding Nasdaq 100 Fund Class or generate 57.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great West T Rowe vs. Nasdaq 100 Fund Class
Performance |
| Timeline |
| Great West T |
| Nasdaq 100 Fund |
Great-west and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great-west and Nasdaq 100
The main advantage of trading using opposite Great-west and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-west 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.| Great-west vs. Issachar Fund Class | Great-west vs. Ab Small Cap | Great-west vs. Volumetric Fund Volumetric | Great-west vs. Artisan Thematic Fund |
| Nasdaq 100 vs. Nasdaq 100 Fund Class | Nasdaq 100 vs. Nasdaq 100 Fund Class | Nasdaq 100 vs. Nasdaq 100 2x Strategy | Nasdaq 100 vs. Dow 2x Strategy |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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