Correlation Between Nasdaq 100 and American Funds
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and American Funds 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 American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Fund Investor and American Funds The, you can compare the effects of market volatilities on Nasdaq 100 and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and American Funds.
Diversification Opportunities for Nasdaq 100 and American Funds
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Nasdaq and American is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Fund Investor and American Funds The in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 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 Fund Investor are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and American Funds go up and down completely randomly.
Pair Corralation between Nasdaq 100 and American Funds
Assuming the 90 days horizon Nasdaq 100 is expected to generate 1.12 times less return on investment than American Funds. But when comparing it to its historical volatility, Nasdaq 100 Fund Investor is 1.04 times less risky than American Funds. It trades about 0.1 of its potential returns per unit of risk. American Funds The is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,603 in American Funds The on September 12, 2024 and sell it today you would earn a total of 2,755 from holding American Funds The or generate 49.17% 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 Investor vs. American Funds The
Performance |
| Timeline |
| Nasdaq 100 Fund |
| American Funds |
Nasdaq 100 and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and American Funds
The main advantage of trading using opposite Nasdaq 100 and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Nasdaq 100 vs. American Funds The | Nasdaq 100 vs. American Funds The | Nasdaq 100 vs. Growth Fund Of | Nasdaq 100 vs. Growth Fund Of |
| American Funds vs. Growth Fund Investor | American Funds vs. Select Fund Investor | American Funds vs. International Growth Fund | American Funds vs. Heritage Fund Investor |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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