Correlation Between Mid-cap 15x and Nasdaq-100(r)
Can any of the company-specific risk be diversified away by investing in both Mid-cap 15x and Nasdaq-100(r) 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 Mid-cap 15x and Nasdaq-100(r) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap 15x Strategy and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Mid-cap 15x and Nasdaq-100(r) 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 Mid-cap 15x with a short position of Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-cap 15x and Nasdaq-100(r).
Diversification Opportunities for Mid-cap 15x and Nasdaq-100(r)
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mid-cap and Nasdaq-100(r) is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x and Mid-cap 15x 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 Mid Cap 15x Strategy are associated (or correlated) with Nasdaq-100(r). 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 2x has no effect on the direction of Mid-cap 15x i.e., Mid-cap 15x and Nasdaq-100(r) go up and down completely randomly.
Pair Corralation between Mid-cap 15x and Nasdaq-100(r)
Assuming the 90 days horizon Mid-cap 15x is expected to generate 1.24 times less return on investment than Nasdaq-100(r). But when comparing it to its historical volatility, Mid Cap 15x Strategy is 1.68 times less risky than Nasdaq-100(r). It trades about 0.05 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 37,809 in Nasdaq 100 2x Strategy on October 31, 2024 and sell it today you would earn a total of 2,038 from holding Nasdaq 100 2x Strategy or generate 5.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap 15x Strategy vs. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| Mid Cap 15x |
| Nasdaq 100 2x |
Mid-cap 15x and Nasdaq-100(r) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid-cap 15x and Nasdaq-100(r)
The main advantage of trading using opposite Mid-cap 15x and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-cap 15x position performs unexpectedly, Nasdaq-100(r) 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(r) will offset losses from the drop in Nasdaq-100(r)'s long position.| Mid-cap 15x vs. Franklin Moderate Allocation | Mid-cap 15x vs. Enhanced Large Pany | Mid-cap 15x vs. Rational Strategic Allocation | Mid-cap 15x vs. Guidemark Large Cap |
| Nasdaq-100(r) vs. Goldman Sachs Strategic | Nasdaq-100(r) vs. Global Gold Fund | Nasdaq-100(r) vs. Fidelity Advisor Gold | Nasdaq-100(r) vs. James Balanced Golden |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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