Correlation Between Nasdaq 100 and Global Fixed
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Global Fixed 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 Global Fixed 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 Global Fixed Income, you can compare the effects of market volatilities on Nasdaq 100 and Global Fixed 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 Global Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Global Fixed.
Diversification Opportunities for Nasdaq 100 and Global Fixed
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq and Global is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Global Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Fixed 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 Global Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Fixed Income has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Global Fixed go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Global Fixed
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 11.32 times more return on investment than Global Fixed. However, Nasdaq 100 is 11.32 times more volatile than Global Fixed Income. It trades about 0.09 of its potential returns per unit of risk. Global Fixed Income is currently generating about 0.12 per unit of risk. If you would invest 22,136 in Nasdaq 100 2x Strategy on October 12, 2024 and sell it today you would earn a total of 33,652 from holding Nasdaq 100 2x Strategy or generate 152.02% 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. Global Fixed Income
Performance |
| Timeline |
| Nasdaq 100 2x |
| Global Fixed Income |
Nasdaq 100 and Global Fixed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Global Fixed
The main advantage of trading using opposite Nasdaq 100 and Global Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Global Fixed 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 Global Fixed will offset losses from the drop in Global Fixed'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 |
| Global Fixed vs. Gurtin California Muni | Global Fixed vs. Transamerica Intermediate Muni | Global Fixed vs. Aig Government Money | Global Fixed vs. Morningstar Municipal 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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