Correlation Between Nasdaq 100 and Aam Select
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Aam Select 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 Aam Select 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 Aam Select Income, you can compare the effects of market volatilities on Nasdaq 100 and Aam Select 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 Aam Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Aam Select.
Diversification Opportunities for Nasdaq 100 and Aam Select
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nasdaq and Aam is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Aam Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aam Select Income 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 Aam Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aam Select Income has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Aam Select go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Aam Select
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to under-perform the Aam Select. In addition to that, Nasdaq 100 is 9.58 times more volatile than Aam Select Income. It trades about -0.11 of its total potential returns per unit of risk. Aam Select Income is currently generating about -0.49 per unit of volatility. If you would invest 932.00 in Aam Select Income on October 9, 2024 and sell it today you would lose (27.00) from holding Aam Select Income or give up 2.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Aam Select Income
Performance |
| Timeline |
| Nasdaq 100 2x |
| Aam Select Income |
Nasdaq 100 and Aam Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Aam Select
The main advantage of trading using opposite Nasdaq 100 and Aam Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Aam Select 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 Aam Select will offset losses from the drop in Aam Select's long position.| Nasdaq 100 vs. Sp 500 2x | Nasdaq 100 vs. Inverse Nasdaq 100 2x | Nasdaq 100 vs. Inverse Sp 500 | Nasdaq 100 vs. Ultra Nasdaq 100 Profunds |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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