Correlation Between Nasdaq-100(r) and Select Fund
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Select 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(r) and Select Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Select Fund R, you can compare the effects of market volatilities on Nasdaq-100(r) and Select 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(r) with a short position of Select Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Select Fund.
Diversification Opportunities for Nasdaq-100(r) and Select Fund
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Nasdaq-100(r) and Select is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Select Fund R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Fund R and Nasdaq-100(r) 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 2x Strategy are associated (or correlated) with Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund R has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Select Fund go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Select Fund
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 2.08 times more return on investment than Select Fund. However, Nasdaq-100(r) is 2.08 times more volatile than Select Fund R. It trades about 0.08 of its potential returns per unit of risk. Select Fund R is currently generating about 0.08 per unit of risk. If you would invest 31,834 in Nasdaq 100 2x Strategy on August 31, 2024 and sell it today you would earn a total of 26,227 from holding Nasdaq 100 2x Strategy or generate 82.39% 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 2x Strategy vs. Select Fund R
Performance |
| Timeline |
| Nasdaq 100 2x |
| Select Fund R |
Nasdaq-100(r) and Select Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Select Fund
The main advantage of trading using opposite Nasdaq-100(r) and Select Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Select 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 Select Fund will offset losses from the drop in Select Fund's long position.| Nasdaq-100(r) vs. Nasdaq 100 2x Strategy | Nasdaq-100(r) vs. Direxion Monthly Nasdaq 100 | Nasdaq-100(r) vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Nasdaq-100(r) vs. Nasdaq 100 2x Strategy |
| Select Fund vs. Select Fund C | Select Fund vs. Ultra Fund C | Select Fund vs. Ultra Fund R6 | Select 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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