Correlation Between Nasdaq 100 and Nasdaq-100 Fund
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Nasdaq-100 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 and Nasdaq-100 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 Nasdaq 100 Fund Class, you can compare the effects of market volatilities on Nasdaq 100 and Nasdaq-100 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 with a short position of Nasdaq-100 Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Nasdaq-100 Fund.
Diversification Opportunities for Nasdaq 100 and Nasdaq-100 Fund
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Nasdaq and Nasdaq-100 is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Nasdaq 100 Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Fund 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 2x Strategy are associated (or correlated) with Nasdaq-100 Fund. 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 Fund has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Nasdaq-100 Fund go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Nasdaq-100 Fund
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 2.02 times more return on investment than Nasdaq-100 Fund. However, Nasdaq 100 is 2.02 times more volatile than Nasdaq 100 Fund Class. It trades about 0.09 of its potential returns per unit of risk. Nasdaq 100 Fund Class is currently generating about 0.09 per unit of risk. If you would invest 55,321 in Nasdaq 100 2x Strategy on August 28, 2024 and sell it today you would earn a total of 2,099 from holding Nasdaq 100 2x Strategy or generate 3.79% 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. Nasdaq 100 Fund Class
Performance |
| Timeline |
| Nasdaq 100 2x |
| Nasdaq 100 Fund |
Nasdaq 100 and Nasdaq-100 Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Nasdaq-100 Fund
The main advantage of trading using opposite Nasdaq 100 and Nasdaq-100 Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Nasdaq-100 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 Nasdaq-100 Fund will offset losses from the drop in Nasdaq-100 Fund's long position.| Nasdaq 100 vs. Direxion Monthly Nasdaq 100 | Nasdaq 100 vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Nasdaq 100 vs. Dow 2x Strategy |
| Nasdaq-100 Fund vs. Nasdaq 100 Fund Class | Nasdaq-100 Fund vs. Nasdaq 100 Fund Class | Nasdaq-100 Fund vs. Nasdaq 100 2x Strategy | Nasdaq-100 Fund vs. Dow 2x Strategy |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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