Correlation Between Health Care and Nasdaq-100 Fund
Can any of the company-specific risk be diversified away by investing in both Health Care and Nasdaq-100 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 Health Care and Nasdaq-100 Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Fund and Nasdaq 100 Fund Class, you can compare the effects of market volatilities on Health Care and Nasdaq-100 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 Health Care with a short position of Nasdaq-100 Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Nasdaq-100 Fund.
Diversification Opportunities for Health Care and Nasdaq-100 Fund
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HEALTH and Nasdaq-100 is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and Nasdaq 100 Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Fund and Health Care 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 Health Care Fund are associated (or correlated) with Nasdaq-100 Fund. 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 Fund has no effect on the direction of Health Care i.e., Health Care and Nasdaq-100 Fund go up and down completely randomly.
Pair Corralation between Health Care and Nasdaq-100 Fund
Assuming the 90 days horizon Health Care is expected to generate 2.39 times less return on investment than Nasdaq-100 Fund. But when comparing it to its historical volatility, Health Care Fund is 1.09 times less risky than Nasdaq-100 Fund. It trades about 0.09 of its potential returns per unit of risk. Nasdaq 100 Fund Class is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,920 in Nasdaq 100 Fund Class on September 1, 2024 and sell it today you would earn a total of 249.00 from holding Nasdaq 100 Fund Class or generate 4.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Fund vs. Nasdaq 100 Fund Class
Performance |
| Timeline |
| Health Care Fund |
| Nasdaq 100 Fund |
Health Care and Nasdaq-100 Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Nasdaq-100 Fund
The main advantage of trading using opposite Health Care and Nasdaq-100 Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care position performs unexpectedly, Nasdaq-100 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 Nasdaq-100 Fund will offset losses from the drop in Nasdaq-100 Fund's long position.| Health Care vs. Banking Fund Class | Health Care vs. Basic Materials Fund | Health Care vs. Biotechnology Fund Class | Health Care vs. Government Long Bond |
| Nasdaq-100 Fund vs. Nasdaq 100 2x Strategy | Nasdaq-100 Fund vs. Nova Fund Class | Nasdaq-100 Fund vs. Russell 2000 15x | Nasdaq-100 Fund vs. Nasdaq 100 Fund Class |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |