Correlation Between NYSE Composite and Inverse Nasdaq-100
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Inverse 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 NYSE Composite and Inverse Nasdaq-100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Inverse Nasdaq 100 Strategy, you can compare the effects of market volatilities on NYSE Composite and Inverse 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 NYSE Composite with a short position of Inverse Nasdaq-100. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Inverse Nasdaq-100.
Diversification Opportunities for NYSE Composite and Inverse Nasdaq-100
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NYSE and Inverse is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Inverse Nasdaq 100 Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Nasdaq 100 and NYSE Composite 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 NYSE Composite are associated (or correlated) with Inverse 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 Inverse Nasdaq 100 has no effect on the direction of NYSE Composite i.e., NYSE Composite and Inverse Nasdaq-100 go up and down completely randomly.
Pair Corralation between NYSE Composite and Inverse Nasdaq-100
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.57 times more return on investment than Inverse Nasdaq-100. However, NYSE Composite is 1.76 times less risky than Inverse Nasdaq-100. It trades about 0.29 of its potential returns per unit of risk. Inverse Nasdaq 100 Strategy is currently generating about -0.05 per unit of risk. If you would invest 1,941,627 in NYSE Composite on August 31, 2024 and sell it today you would earn a total of 79,355 from holding NYSE Composite or generate 4.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Inverse Nasdaq 100 Strategy
Performance |
| Timeline |
NYSE Composite and Inverse Nasdaq-100 Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Inverse Nasdaq 100 Strategy
Pair trading matchups for Inverse Nasdaq-100
Pair Trading with NYSE Composite and Inverse Nasdaq-100
The main advantage of trading using opposite NYSE Composite and Inverse Nasdaq-100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Inverse 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 Inverse Nasdaq-100 will offset losses from the drop in Inverse Nasdaq-100's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Inverse Nasdaq-100 vs. American Century High | Inverse Nasdaq-100 vs. Multi Manager High Yield | Inverse Nasdaq-100 vs. Virtus High Yield | Inverse Nasdaq-100 vs. Mesirow Financial High |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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