Correlation Between Nasdaq-100(r) and Cambiar Small
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Cambiar Small 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 Cambiar Small 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 Cambiar Small Cap, you can compare the effects of market volatilities on Nasdaq-100(r) and Cambiar Small 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 Cambiar Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Cambiar Small.
Diversification Opportunities for Nasdaq-100(r) and Cambiar Small
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq-100(r) and Cambiar is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Cambiar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Small Cap 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 Cambiar Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Small Cap has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Cambiar Small go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Cambiar Small
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 2.18 times more return on investment than Cambiar Small. However, Nasdaq-100(r) is 2.18 times more volatile than Cambiar Small Cap. It trades about 0.1 of its potential returns per unit of risk. Cambiar Small Cap is currently generating about 0.05 per unit of risk. If you would invest 21,293 in Nasdaq 100 2x Strategy on August 30, 2024 and sell it today you would earn a total of 35,757 from holding Nasdaq 100 2x Strategy or generate 167.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Cambiar Small Cap
Performance |
| Timeline |
| Nasdaq 100 2x |
| Cambiar Small Cap |
Nasdaq-100(r) and Cambiar Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Cambiar Small
The main advantage of trading using opposite Nasdaq-100(r) and Cambiar Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Cambiar Small 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 Cambiar Small will offset losses from the drop in Cambiar Small's long position.| Nasdaq-100(r) vs. Direxion Monthly Nasdaq 100 | Nasdaq-100(r) vs. HUMANA INC | Nasdaq-100(r) vs. Aquagold International | Nasdaq-100(r) vs. Barloworld Ltd ADR |
| Cambiar Small vs. Jpmorgan Dynamic Small | Cambiar Small vs. Cambiar Opportunity Fund | Cambiar Small vs. Virtus Emerging Markets | Cambiar Small vs. Cambiar International Equity |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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