Correlation Between Nasdaq-100(r) and Strengthening Dollar
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Strengthening Dollar 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 Strengthening Dollar 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 Strengthening Dollar 2x, you can compare the effects of market volatilities on Nasdaq-100(r) and Strengthening Dollar 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 Strengthening Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Strengthening Dollar.
Diversification Opportunities for Nasdaq-100(r) and Strengthening Dollar
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq-100(r) and Strengthening is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Strengthening Dollar 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strengthening Dollar 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 Strengthening Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strengthening Dollar has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Strengthening Dollar go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Strengthening Dollar
Assuming the 90 days horizon Nasdaq-100(r) is expected to generate 1.28 times less return on investment than Strengthening Dollar. In addition to that, Nasdaq-100(r) is 2.24 times more volatile than Strengthening Dollar 2x. It trades about 0.09 of its total potential returns per unit of risk. Strengthening Dollar 2x is currently generating about 0.25 per unit of volatility. If you would invest 6,465 in Strengthening Dollar 2x on August 28, 2024 and sell it today you would earn a total of 350.00 from holding Strengthening Dollar 2x or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Strengthening Dollar 2x
Performance |
| Timeline |
| Nasdaq 100 2x |
| Strengthening Dollar |
Nasdaq-100(r) and Strengthening Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Strengthening Dollar
The main advantage of trading using opposite Nasdaq-100(r) and Strengthening Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Strengthening Dollar 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 Strengthening Dollar will offset losses from the drop in Strengthening Dollar'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 |
| Strengthening Dollar vs. Basic Materials Fund | Strengthening Dollar vs. Basic Materials Fund | Strengthening Dollar vs. Banking Fund Class | Strengthening Dollar vs. Basic Materials Fund |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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