Correlation Between Nasdaq-100 Fund and Sp 500
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Fund and Sp 500 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 Fund and Sp 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Fund Class and Sp 500 2x, you can compare the effects of market volatilities on Nasdaq-100 Fund and Sp 500 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 Fund with a short position of Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Fund and Sp 500.
Diversification Opportunities for Nasdaq-100 Fund and Sp 500
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Nasdaq-100 and RYTTX is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Fund Class and Sp 500 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 2x and Nasdaq-100 Fund 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 Fund Class are associated (or correlated) with Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 2x has no effect on the direction of Nasdaq-100 Fund i.e., Nasdaq-100 Fund and Sp 500 go up and down completely randomly.
Pair Corralation between Nasdaq-100 Fund and Sp 500
Assuming the 90 days horizon Nasdaq-100 Fund is expected to generate 1.68 times less return on investment than Sp 500. But when comparing it to its historical volatility, Nasdaq 100 Fund Class is 1.4 times less risky than Sp 500. It trades about 0.09 of its potential returns per unit of risk. Sp 500 2x is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 20,133 in Sp 500 2x on August 31, 2024 and sell it today you would earn a total of 15,938 from holding Sp 500 2x or generate 79.16% 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 Fund Class vs. Sp 500 2x
Performance |
| Timeline |
| Nasdaq 100 Fund |
| Sp 500 2x |
Nasdaq-100 Fund and Sp 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100 Fund and Sp 500
The main advantage of trading using opposite Nasdaq-100 Fund and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Fund position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500's long position.| 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 |
| Sp 500 vs. Ab Discovery Value | Sp 500 vs. Mid Cap Value Profund | Sp 500 vs. Heartland Value Plus | Sp 500 vs. Boston Partners 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |