Correlation Between Nasdaq-100 Fund and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Fund and Growth 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 Nasdaq-100 Fund and Growth Fund 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 Growth Fund I, you can compare the effects of market volatilities on Nasdaq-100 Fund and Growth 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 Nasdaq-100 Fund with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Fund and Growth Fund.
Diversification Opportunities for Nasdaq-100 Fund and Growth Fund
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Nasdaq-100 and Growth is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Fund Class and Growth Fund I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund I 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 Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund I has no effect on the direction of Nasdaq-100 Fund i.e., Nasdaq-100 Fund and Growth Fund go up and down completely randomly.
Pair Corralation between Nasdaq-100 Fund and Growth Fund
Assuming the 90 days horizon Nasdaq-100 Fund is expected to generate 1.16 times less return on investment than Growth Fund. In addition to that, Nasdaq-100 Fund is 1.05 times more volatile than Growth Fund I. It trades about 0.21 of its total potential returns per unit of risk. Growth Fund I is currently generating about 0.25 per unit of volatility. If you would invest 6,013 in Growth Fund I on September 2, 2024 and sell it today you would earn a total of 301.00 from holding Growth Fund I or generate 5.01% 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 Fund Class vs. Growth Fund I
Performance |
| Timeline |
| Nasdaq 100 Fund |
| Growth Fund I |
Nasdaq-100 Fund and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100 Fund and Growth Fund
The main advantage of trading using opposite Nasdaq-100 Fund and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Fund position performs unexpectedly, Growth 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 Growth Fund will offset losses from the drop in Growth Fund's long position.| Nasdaq-100 Fund vs. Nasdaq 100 Fund Class | Nasdaq-100 Fund vs. Nasdaq 100 Fund Class | Nasdaq-100 Fund vs. Nasdaq 100 Profund Nasdaq 100 | Nasdaq-100 Fund vs. Select Fund R |
| Growth Fund vs. New Perspective Fund | Growth Fund vs. Investment Of America | Growth Fund vs. Virtus Emerging Markets | Growth Fund vs. Oak Ridge Small |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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