Correlation Between Nasdaq-100 Fund and Catalyst Dynamic
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Fund and Catalyst Dynamic 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 Fund and Catalyst Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Fund Class and Catalyst Dynamic Alpha, you can compare the effects of market volatilities on Nasdaq-100 Fund and Catalyst Dynamic 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 Fund with a short position of Catalyst Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Fund and Catalyst Dynamic.
Diversification Opportunities for Nasdaq-100 Fund and Catalyst Dynamic
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq-100 and Catalyst is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Fund Class and Catalyst Dynamic Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Dynamic Alpha and Nasdaq-100 Fund 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 Fund Class are associated (or correlated) with Catalyst Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Dynamic Alpha has no effect on the direction of Nasdaq-100 Fund i.e., Nasdaq-100 Fund and Catalyst Dynamic go up and down completely randomly.
Pair Corralation between Nasdaq-100 Fund and Catalyst Dynamic
Assuming the 90 days horizon Nasdaq-100 Fund is expected to generate 1.58 times less return on investment than Catalyst Dynamic. In addition to that, Nasdaq-100 Fund is 1.04 times more volatile than Catalyst Dynamic Alpha. It trades about 0.21 of its total potential returns per unit of risk. Catalyst Dynamic Alpha is currently generating about 0.34 per unit of volatility. If you would invest 2,427 in Catalyst Dynamic Alpha on September 1, 2024 and sell it today you would earn a total of 175.00 from holding Catalyst Dynamic Alpha or generate 7.21% 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 Fund Class vs. Catalyst Dynamic Alpha
Performance |
| Timeline |
| Nasdaq 100 Fund |
| Catalyst Dynamic Alpha |
Nasdaq-100 Fund and Catalyst Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100 Fund and Catalyst Dynamic
The main advantage of trading using opposite Nasdaq-100 Fund and Catalyst Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Fund position performs unexpectedly, Catalyst Dynamic 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 Catalyst Dynamic will offset losses from the drop in Catalyst Dynamic's long position.| Nasdaq-100 Fund vs. Nasdaq 100 Fund Class | Nasdaq-100 Fund vs. Nasdaq 100 Profund Nasdaq 100 | Nasdaq-100 Fund vs. Select Fund R | Nasdaq-100 Fund vs. Select Fund C |
| Catalyst Dynamic vs. Catalyst Dynamic Alpha | Catalyst Dynamic vs. Nasdaq 100 Fund Class | Catalyst Dynamic vs. Catalyst Dynamic Alpha | Catalyst Dynamic 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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