Correlation Between Nasdaq 100 and Vanguard Small
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Vanguard Small 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 Vanguard Small 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 Vanguard Small Cap Growth, you can compare the effects of market volatilities on Nasdaq 100 and Vanguard Small 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 Vanguard Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Vanguard Small.
Diversification Opportunities for Nasdaq 100 and Vanguard Small
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq and Vanguard is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Vanguard Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap 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 Vanguard Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Vanguard Small go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Vanguard Small
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 1.59 times more return on investment than Vanguard Small. However, Nasdaq 100 is 1.59 times more volatile than Vanguard Small Cap Growth. It trades about 0.06 of its potential returns per unit of risk. Vanguard Small Cap Growth is currently generating about 0.07 per unit of risk. If you would invest 42,615 in Nasdaq 100 2x Strategy on September 12, 2024 and sell it today you would earn a total of 802.00 from holding Nasdaq 100 2x Strategy or generate 1.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Vanguard Small Cap Growth
Performance |
| Timeline |
| Nasdaq 100 2x |
| Vanguard Small Cap |
Nasdaq 100 and Vanguard Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Vanguard Small
The main advantage of trading using opposite Nasdaq 100 and Vanguard Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Vanguard Small 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 Vanguard Small will offset losses from the drop in Vanguard Small's long position.| Nasdaq 100 vs. Ambrus Core Bond | Nasdaq 100 vs. Pace High Yield | Nasdaq 100 vs. Franklin High Yield | Nasdaq 100 vs. The National Tax Free |
| Vanguard Small vs. Nasdaq 100 2x Strategy | Vanguard Small vs. Shelton Emerging Markets | Vanguard Small vs. Pace International Emerging | Vanguard Small vs. Eagle Mlp 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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