Correlation Between Nasdaq-100(r) and Midcap Fund
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Midcap 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 Midcap 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 Midcap Fund Class, you can compare the effects of market volatilities on Nasdaq-100(r) and Midcap 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 Midcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Midcap Fund.
Diversification Opportunities for Nasdaq-100(r) and Midcap Fund
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq-100(r) and Midcap is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Midcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Fund Class 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 Midcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Fund Class has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Midcap Fund go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Midcap Fund
Assuming the 90 days horizon Nasdaq-100(r) is expected to generate 1.37 times less return on investment than Midcap Fund. In addition to that, Nasdaq-100(r) is 2.22 times more volatile than Midcap Fund Class. It trades about 0.11 of its total potential returns per unit of risk. Midcap Fund Class is currently generating about 0.32 per unit of volatility. If you would invest 4,415 in Midcap Fund Class on August 29, 2024 and sell it today you would earn a total of 316.00 from holding Midcap Fund Class or generate 7.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Midcap Fund Class
Performance |
| Timeline |
| Nasdaq 100 2x |
| Midcap Fund Class |
Nasdaq-100(r) and Midcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Midcap Fund
The main advantage of trading using opposite Nasdaq-100(r) and Midcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Midcap 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 Midcap Fund will offset losses from the drop in Midcap 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 |
| Midcap Fund vs. Sterling Capital Short | Midcap Fund vs. T Rowe Price | Midcap Fund vs. Mirova Global Green | Midcap Fund vs. Ambrus Core Bond |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |