Correlation Between Nasdaq-100(r) and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Nasdaq 100 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 Nasdaq 100 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 Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Nasdaq-100(r) and Nasdaq 100 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 Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Nasdaq 100.
Diversification Opportunities for Nasdaq-100(r) and Nasdaq 100
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Nasdaq-100(r) and Nasdaq is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x 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 Nasdaq 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Nasdaq 100 go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Nasdaq 100
Assuming the 90 days horizon Nasdaq-100(r) is expected to generate 1.02 times less return on investment than Nasdaq 100. In addition to that, Nasdaq-100(r) is 1.0 times more volatile than Nasdaq 100 2x Strategy. It trades about 0.07 of its total potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.08 per unit of volatility. If you would invest 34,855 in Nasdaq 100 2x Strategy on August 28, 2024 and sell it today you would earn a total of 22,565 from holding Nasdaq 100 2x Strategy or generate 64.74% 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 2x Strategy vs. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| Nasdaq 100 2x |
| Nasdaq 100 2x |
Nasdaq-100(r) and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Nasdaq 100
The main advantage of trading using opposite Nasdaq-100(r) and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Nasdaq 100 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 Nasdaq 100 will offset losses from the drop in Nasdaq 100's long position.| Nasdaq-100(r) vs. Ab Value Fund | Nasdaq-100(r) vs. Rational Special Situations | Nasdaq-100(r) vs. Ab E Opportunities | Nasdaq-100(r) vs. Qs Growth Fund |
| Nasdaq 100 vs. Direxion Monthly Nasdaq 100 | Nasdaq 100 vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Nasdaq 100 vs. Dow 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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