Correlation Between Nasdaq 100 and American Funds
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and American Funds 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 and American Funds 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 American Funds Income, you can compare the effects of market volatilities on Nasdaq 100 and American Funds 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 with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and American Funds.
Diversification Opportunities for Nasdaq 100 and American Funds
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nasdaq and American is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Profund Nasdaq 100 and American Funds Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Income and Nasdaq 100 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Income has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and American Funds go up and down completely randomly.
Pair Corralation between Nasdaq 100 and American Funds
Assuming the 90 days horizon Nasdaq 100 Profund Nasdaq 100 is expected to generate 1.76 times more return on investment than American Funds. However, Nasdaq 100 is 1.76 times more volatile than American Funds Income. It trades about -0.03 of its potential returns per unit of risk. American Funds Income is currently generating about -0.27 per unit of risk. If you would invest 3,530 in Nasdaq 100 Profund Nasdaq 100 on October 9, 2024 and sell it today you would lose (33.00) from holding Nasdaq 100 Profund Nasdaq 100 or give up 0.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Profund Nasdaq 100 vs. American Funds Income
Performance |
| Timeline |
| Nasdaq 100 Profund |
| American Funds Income |
Nasdaq 100 and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and American Funds
The main advantage of trading using opposite Nasdaq 100 and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Nasdaq 100 vs. Bull Profund Bull | Nasdaq 100 vs. Nasdaq 100 Profund Nasdaq 100 | Nasdaq 100 vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Nasdaq 100 vs. Small Cap Profund Small Cap |
| American Funds vs. Altegris Futures Evolution | American Funds vs. Ab Bond Inflation | American Funds vs. Guidepath Managed Futures | American Funds vs. Fidelity Sai Inflationfocused |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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