Correlation Between Nasdaq-100(r) and Biotechnology Fund
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Biotechnology Fund 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 Biotechnology Fund 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 Biotechnology Fund Class, you can compare the effects of market volatilities on Nasdaq-100(r) and Biotechnology Fund 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 Biotechnology Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Biotechnology Fund.
Diversification Opportunities for Nasdaq-100(r) and Biotechnology Fund
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nasdaq-100(r) and Biotechnology is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Biotechnology Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotechnology Fund Class 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 Biotechnology Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotechnology Fund Class has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Biotechnology Fund go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Biotechnology Fund
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 1.53 times more return on investment than Biotechnology Fund. However, Nasdaq-100(r) is 1.53 times more volatile than Biotechnology Fund Class. It trades about 0.09 of its potential returns per unit of risk. Biotechnology Fund Class is currently generating about -0.02 per unit of risk. If you would invest 39,793 in Nasdaq 100 2x Strategy on August 27, 2024 and sell it today you would earn a total of 1,486 from holding Nasdaq 100 2x Strategy or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Biotechnology Fund Class
Performance |
| Timeline |
| Nasdaq 100 2x |
| Biotechnology Fund Class |
Nasdaq-100(r) and Biotechnology Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Biotechnology Fund
The main advantage of trading using opposite Nasdaq-100(r) and Biotechnology Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Biotechnology Fund 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 Biotechnology Fund will offset losses from the drop in Biotechnology Fund's long position.| Nasdaq-100(r) vs. Evaluator Conservative Rms | Nasdaq-100(r) vs. Pioneer Diversified High | Nasdaq-100(r) vs. Calvert Conservative Allocation | Nasdaq-100(r) vs. Fidelity Advisor Diversified |
| Biotechnology Fund vs. Evaluator Conservative Rms | Biotechnology Fund vs. Lord Abbett Diversified | Biotechnology Fund vs. Pimco Diversified Income | Biotechnology Fund vs. Fidelity Advisor Diversified |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |