Correlation Between Nasdaq 100 and Df Dent
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Df Dent 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 Df Dent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Df Dent Small, you can compare the effects of market volatilities on Nasdaq 100 and Df Dent 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 Df Dent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Df Dent.
Diversification Opportunities for Nasdaq 100 and Df Dent
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nasdaq and DFDSX is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Df Dent Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Df Dent Small 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 2x Strategy are associated (or correlated) with Df Dent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Df Dent Small has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Df Dent go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Df Dent
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 1.57 times more return on investment than Df Dent. However, Nasdaq 100 is 1.57 times more volatile than Df Dent Small. It trades about 0.27 of its potential returns per unit of risk. Df Dent Small is currently generating about 0.3 per unit of risk. If you would invest 38,210 in Nasdaq 100 2x Strategy on September 4, 2024 and sell it today you would earn a total of 4,438 from holding Nasdaq 100 2x Strategy or generate 11.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Df Dent Small
Performance |
| Timeline |
| Nasdaq 100 2x |
| Df Dent Small |
Nasdaq 100 and Df Dent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Df Dent
The main advantage of trading using opposite Nasdaq 100 and Df Dent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Df Dent 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 Df Dent will offset losses from the drop in Df Dent's long position.| Nasdaq 100 vs. L Abbett Growth | Nasdaq 100 vs. Pace Smallmedium Growth | Nasdaq 100 vs. William Blair Growth | Nasdaq 100 vs. Artisan Small Cap |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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