Correlation Between Nasdaq-100(r) and Gmo Emerging
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Gmo Emerging 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 Gmo Emerging 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 Gmo Emerging Markets, you can compare the effects of market volatilities on Nasdaq-100(r) and Gmo Emerging 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 Gmo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Gmo Emerging.
Diversification Opportunities for Nasdaq-100(r) and Gmo Emerging
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nasdaq-100(r) and Gmo is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Gmo Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Emerging Markets 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 Gmo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Emerging Markets has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Gmo Emerging go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Gmo Emerging
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to under-perform the Gmo Emerging. In addition to that, Nasdaq-100(r) is 2.97 times more volatile than Gmo Emerging Markets. It trades about -0.18 of its total potential returns per unit of risk. Gmo Emerging Markets is currently generating about 0.05 per unit of volatility. If you would invest 2,398 in Gmo Emerging Markets on December 26, 2024 and sell it today you would earn a total of 28.00 from holding Gmo Emerging Markets or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Gmo Emerging Markets
Performance |
| Timeline |
| Nasdaq 100 2x |
| Gmo Emerging Markets |
Nasdaq-100(r) and Gmo Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Gmo Emerging
The main advantage of trading using opposite Nasdaq-100(r) and Gmo Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Gmo Emerging 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 Gmo Emerging will offset losses from the drop in Gmo Emerging's long position.| Nasdaq-100(r) vs. Sp 500 2x | Nasdaq-100(r) vs. Inverse Nasdaq 100 2x | Nasdaq-100(r) vs. Inverse Sp 500 | Nasdaq-100(r) vs. Ultra Nasdaq 100 Profunds |
| Gmo Emerging vs. Financials Ultrasector Profund | Gmo Emerging vs. 1919 Financial Services | Gmo Emerging vs. Financial Industries Fund | Gmo Emerging vs. Vanguard Money Market |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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