Correlation Between Nasdaq 100 and Teton Westwood
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Teton Westwood 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 Teton Westwood 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 Teton Westwood Balanced, you can compare the effects of market volatilities on Nasdaq 100 and Teton Westwood 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 Teton Westwood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Teton Westwood.
Diversification Opportunities for Nasdaq 100 and Teton Westwood
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nasdaq and Teton is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Teton Westwood Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Westwood Balanced 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 Teton Westwood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Westwood Balanced has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Teton Westwood go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Teton Westwood
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 1.45 times more return on investment than Teton Westwood. However, Nasdaq 100 is 1.45 times more volatile than Teton Westwood Balanced. It trades about 0.27 of its potential returns per unit of risk. Teton Westwood Balanced is currently generating about -0.08 per unit of risk. If you would invest 38,210 in Nasdaq 100 2x Strategy on September 4, 2024 and sell it today you would earn a total of 4,438 from holding Nasdaq 100 2x Strategy or generate 11.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Teton Westwood Balanced
Performance |
| Timeline |
| Nasdaq 100 2x |
| Teton Westwood Balanced |
Nasdaq 100 and Teton Westwood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Teton Westwood
The main advantage of trading using opposite Nasdaq 100 and Teton Westwood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Teton Westwood 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 Teton Westwood will offset losses from the drop in Teton Westwood's long position.| Nasdaq 100 vs. L Abbett Growth | Nasdaq 100 vs. Pace Smallmedium Growth | Nasdaq 100 vs. William Blair Growth | Nasdaq 100 vs. Artisan Small Cap |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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