Correlation Between Nasdaq-100 Index and California Tax-free
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Index and California Tax-free 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 Nasdaq-100 Index and California Tax-free into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Index Fund and California Tax Free Income, you can compare the effects of market volatilities on Nasdaq-100 Index and California Tax-free 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 Nasdaq-100 Index with a short position of California Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Index and California Tax-free.
Diversification Opportunities for Nasdaq-100 Index and California Tax-free
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NASDAQ-100 and California is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and California Tax Free Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Tax Free and Nasdaq-100 Index 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 Nasdaq 100 Index Fund are associated (or correlated) with California Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Tax Free has no effect on the direction of Nasdaq-100 Index i.e., Nasdaq-100 Index and California Tax-free go up and down completely randomly.
Pair Corralation between Nasdaq-100 Index and California Tax-free
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 4.64 times more return on investment than California Tax-free. However, Nasdaq-100 Index is 4.64 times more volatile than California Tax Free Income. It trades about 0.08 of its potential returns per unit of risk. California Tax Free Income is currently generating about 0.11 per unit of risk. If you would invest 3,916 in Nasdaq 100 Index Fund on August 29, 2024 and sell it today you would earn a total of 77.00 from holding Nasdaq 100 Index Fund or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. California Tax Free Income
Performance |
| Timeline |
| Nasdaq 100 Index |
| California Tax Free |
Nasdaq-100 Index and California Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100 Index and California Tax-free
The main advantage of trading using opposite Nasdaq-100 Index and California Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Index position performs unexpectedly, California Tax-free 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 California Tax-free will offset losses from the drop in California Tax-free's long position.| Nasdaq-100 Index vs. Virtus Seix Government | Nasdaq-100 Index vs. Franklin Adjustable Government | Nasdaq-100 Index vs. Us Government Securities | Nasdaq-100 Index vs. Prudential Government Income |
| California Tax-free vs. Tiaa Cref Small Cap Blend | California Tax-free vs. T Rowe Price | California Tax-free vs. Jhancock Diversified Macro | California Tax-free vs. Davenport Small Cap |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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