Correlation Between Nasdaq-100(r) and Monthly Rebalance
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Monthly Rebalance 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(r) and Monthly Rebalance 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 Monthly Rebalance Nasdaq 100, you can compare the effects of market volatilities on Nasdaq-100(r) and Monthly Rebalance 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(r) with a short position of Monthly Rebalance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Monthly Rebalance.
Diversification Opportunities for Nasdaq-100(r) and Monthly Rebalance
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq-100(r) and Monthly is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Monthly Rebalance Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monthly Rebalance and Nasdaq-100(r) 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 Monthly Rebalance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monthly Rebalance has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Monthly Rebalance go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Monthly Rebalance
Assuming the 90 days horizon Nasdaq-100(r) is expected to generate 1.02 times less return on investment than Monthly Rebalance. In addition to that, Nasdaq-100(r) is 1.01 times more volatile than Monthly Rebalance Nasdaq 100. It trades about 0.1 of its total potential returns per unit of risk. Monthly Rebalance Nasdaq 100 is currently generating about 0.1 per unit of volatility. If you would invest 59,789 in Monthly Rebalance Nasdaq 100 on August 25, 2024 and sell it today you would earn a total of 2,709 from holding Monthly Rebalance Nasdaq 100 or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Monthly Rebalance Nasdaq 100
Performance |
| Timeline |
| Nasdaq 100 2x |
| Monthly Rebalance |
Nasdaq-100(r) and Monthly Rebalance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Monthly Rebalance
The main advantage of trading using opposite Nasdaq-100(r) and Monthly Rebalance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Monthly Rebalance 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 Monthly Rebalance will offset losses from the drop in Monthly Rebalance's long position.| Nasdaq-100(r) vs. Ab E Opportunities | Nasdaq-100(r) vs. Lord Abbett Diversified | Nasdaq-100(r) vs. Vanguard Strategic Small Cap | Nasdaq-100(r) vs. Volumetric Fund Volumetric |
| Monthly Rebalance vs. Nasdaq 100 2x Strategy | Monthly Rebalance vs. Direxion Monthly Nasdaq 100 | Monthly Rebalance vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Monthly Rebalance vs. Nasdaq 100 2x Strategy |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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