Correlation Between Nasdaq-100 Profund and Mid-cap Growth
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Profund and Mid-cap Growth 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 Profund and Mid-cap Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Profund Nasdaq 100 and Mid Cap Growth Profund, you can compare the effects of market volatilities on Nasdaq-100 Profund and Mid-cap Growth 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 Profund with a short position of Mid-cap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Profund and Mid-cap Growth.
Diversification Opportunities for Nasdaq-100 Profund and Mid-cap Growth
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq-100 and Mid-cap is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Profund Nasdaq 100 and Mid Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Growth and Nasdaq-100 Profund 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 Profund Nasdaq 100 are associated (or correlated) with Mid-cap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Growth has no effect on the direction of Nasdaq-100 Profund i.e., Nasdaq-100 Profund and Mid-cap Growth go up and down completely randomly.
Pair Corralation between Nasdaq-100 Profund and Mid-cap Growth
Assuming the 90 days horizon Nasdaq 100 Profund Nasdaq 100 is expected to generate 1.11 times more return on investment than Mid-cap Growth. However, Nasdaq-100 Profund is 1.11 times more volatile than Mid Cap Growth Profund. It trades about 0.11 of its potential returns per unit of risk. Mid Cap Growth Profund is currently generating about 0.07 per unit of risk. If you would invest 1,916 in Nasdaq 100 Profund Nasdaq 100 on August 31, 2024 and sell it today you would earn a total of 1,501 from holding Nasdaq 100 Profund Nasdaq 100 or generate 78.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Profund Nasdaq 100 vs. Mid Cap Growth Profund
Performance |
| Timeline |
| Nasdaq 100 Profund |
| Mid Cap Growth |
Nasdaq-100 Profund and Mid-cap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100 Profund and Mid-cap Growth
The main advantage of trading using opposite Nasdaq-100 Profund and Mid-cap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Profund position performs unexpectedly, Mid-cap Growth 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 Mid-cap Growth will offset losses from the drop in Mid-cap Growth's long position.The idea behind Nasdaq 100 Profund Nasdaq 100 and Mid Cap Growth Profund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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