Correlation Between Ab Small and Nasdaq-100(r)
Can any of the company-specific risk be diversified away by investing in both Ab Small and Nasdaq-100(r) 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 Ab Small and Nasdaq-100(r) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Ab Small and Nasdaq-100(r) 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 Ab Small with a short position of Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Nasdaq-100(r).
Diversification Opportunities for Ab Small and Nasdaq-100(r)
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between QUAKX and Nasdaq-100(r) is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x and Ab Small 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 Ab Small Cap are associated (or correlated) with Nasdaq-100(r). 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 2x has no effect on the direction of Ab Small i.e., Ab Small and Nasdaq-100(r) go up and down completely randomly.
Pair Corralation between Ab Small and Nasdaq-100(r)
Assuming the 90 days horizon Ab Small Cap is expected to generate 0.72 times more return on investment than Nasdaq-100(r). However, Ab Small Cap is 1.39 times less risky than Nasdaq-100(r). It trades about 0.2 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.07 per unit of risk. If you would invest 6,637 in Ab Small Cap on August 31, 2024 and sell it today you would earn a total of 464.00 from holding Ab Small Cap or generate 6.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| Ab Small Cap |
| Nasdaq 100 2x |
Ab Small and Nasdaq-100(r) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Nasdaq-100(r)
The main advantage of trading using opposite Ab Small and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Nasdaq-100(r) 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(r) will offset losses from the drop in Nasdaq-100(r)'s long position.| Ab Small vs. The Hartford Midcap | Ab Small vs. Mfs Emerging Markets | Ab Small vs. Wells Fargo Special | Ab Small vs. Baron Emerging Markets |
| Nasdaq-100(r) vs. Fisher Small Cap | Nasdaq-100(r) vs. Ab Small Cap | Nasdaq-100(r) vs. The Hartford Small | Nasdaq-100(r) vs. Tax Managed Mid Small |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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