Correlation Between Nasdaq-100(r) and Multisector Bond
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Multisector Bond 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 Multisector Bond 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 Multisector Bond Sma, you can compare the effects of market volatilities on Nasdaq-100(r) and Multisector Bond 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 Multisector Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Multisector Bond.
Diversification Opportunities for Nasdaq-100(r) and Multisector Bond
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nasdaq-100(r) and Multisector is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Multisector Bond Sma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multisector Bond Sma 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 Multisector Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multisector Bond Sma has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Multisector Bond go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Multisector Bond
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 4.85 times more return on investment than Multisector Bond. However, Nasdaq-100(r) is 4.85 times more volatile than Multisector Bond Sma. It trades about 0.1 of its potential returns per unit of risk. Multisector Bond Sma is currently generating about 0.11 per unit of risk. If you would invest 26,991 in Nasdaq 100 2x Strategy on August 30, 2024 and sell it today you would earn a total of 30,077 from holding Nasdaq 100 2x Strategy or generate 111.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Multisector Bond Sma
Performance |
| Timeline |
| Nasdaq 100 2x |
| Multisector Bond Sma |
Nasdaq-100(r) and Multisector Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Multisector Bond
The main advantage of trading using opposite Nasdaq-100(r) and Multisector Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Multisector Bond 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 Multisector Bond will offset losses from the drop in Multisector Bond'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 |
| Multisector Bond vs. HUMANA INC | Multisector Bond vs. Aquagold International | Multisector Bond vs. Barloworld Ltd ADR | Multisector Bond vs. Morningstar Unconstrained Allocation |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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