Correlation Between NYSE Composite and Nasdaq-100 Fund
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Nasdaq-100 Fund 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 Nasdaq-100 Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Nasdaq 100 Fund Class, you can compare the effects of market volatilities on NYSE Composite and Nasdaq-100 Fund 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 Nasdaq-100 Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Nasdaq-100 Fund.
Diversification Opportunities for NYSE Composite and Nasdaq-100 Fund
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Nasdaq-100 is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 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 Nasdaq-100 Fund. 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 NYSE Composite i.e., NYSE Composite and Nasdaq-100 Fund go up and down completely randomly.
Pair Corralation between NYSE Composite and Nasdaq-100 Fund
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.35 times less return on investment than Nasdaq-100 Fund. But when comparing it to its historical volatility, NYSE Composite is 1.62 times less risky than Nasdaq-100 Fund. It trades about 0.11 of its potential returns per unit of risk. Nasdaq 100 Fund Class is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,443 in Nasdaq 100 Fund Class on August 31, 2024 and sell it today you would earn a total of 2,280 from holding Nasdaq 100 Fund Class or generate 41.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
NYSE Composite vs. Nasdaq 100 Fund Class
Performance |
| Timeline |
NYSE Composite and Nasdaq-100 Fund Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Nasdaq 100 Fund Class
Pair trading matchups for Nasdaq-100 Fund
Pair Trading with NYSE Composite and Nasdaq-100 Fund
The main advantage of trading using opposite NYSE Composite and Nasdaq-100 Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Nasdaq-100 Fund 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 Fund will offset losses from the drop in Nasdaq-100 Fund's long position.| NYSE Composite vs. Nextplat Corp | NYSE Composite vs. Qualys Inc | NYSE Composite vs. Cadence Design Systems | NYSE Composite vs. Asure Software |
| Nasdaq-100 Fund vs. Nasdaq 100 Fund Class | Nasdaq-100 Fund vs. Nasdaq 100 Fund Class | Nasdaq-100 Fund vs. Nasdaq 100 2x Strategy | Nasdaq-100 Fund 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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