Correlation Between Nasdaq 100 and Fulcrum Diversified
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Fulcrum Diversified 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 Fulcrum Diversified 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 Fulcrum Diversified Absolute, you can compare the effects of market volatilities on Nasdaq 100 and Fulcrum Diversified 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 Fulcrum Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Fulcrum Diversified.
Diversification Opportunities for Nasdaq 100 and Fulcrum Diversified
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nasdaq and Fulcrum is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Fulcrum Diversified Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulcrum Diversified 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 Fulcrum Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulcrum Diversified has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Fulcrum Diversified go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Fulcrum Diversified
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to under-perform the Fulcrum Diversified. In addition to that, Nasdaq 100 is 6.03 times more volatile than Fulcrum Diversified Absolute. It trades about -0.02 of its total potential returns per unit of risk. Fulcrum Diversified Absolute is currently generating about 0.14 per unit of volatility. If you would invest 935.00 in Fulcrum Diversified Absolute on November 7, 2024 and sell it today you would earn a total of 10.00 from holding Fulcrum Diversified Absolute or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Fulcrum Diversified Absolute
Performance |
| Timeline |
| Nasdaq 100 2x |
| Fulcrum Diversified |
Nasdaq 100 and Fulcrum Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Fulcrum Diversified
The main advantage of trading using opposite Nasdaq 100 and Fulcrum Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Fulcrum Diversified 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 Fulcrum Diversified will offset losses from the drop in Fulcrum Diversified'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 |
| Fulcrum Diversified vs. Us Vector Equity | Fulcrum Diversified vs. Nuveen Core Equity | Fulcrum Diversified vs. Aqr Equity Market | Fulcrum Diversified vs. Doubleline Core Fixed |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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