Correlation Between Nasdaq-100(r) and Sit Esg
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Sit Esg 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 Sit Esg 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 Sit Esg Growth, you can compare the effects of market volatilities on Nasdaq-100(r) and Sit Esg 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 Sit Esg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Sit Esg.
Diversification Opportunities for Nasdaq-100(r) and Sit Esg
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nasdaq-100(r) and SIT is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Sit Esg Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Esg Growth 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 Sit Esg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Esg Growth has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Sit Esg go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Sit Esg
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 2.87 times more return on investment than Sit Esg. However, Nasdaq-100(r) is 2.87 times more volatile than Sit Esg Growth. It trades about 0.07 of its potential returns per unit of risk. Sit Esg Growth is currently generating about 0.1 per unit of risk. If you would invest 48,157 in Nasdaq 100 2x Strategy on September 1, 2024 and sell it today you would earn a total of 8,893 from holding Nasdaq 100 2x Strategy or generate 18.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Sit Esg Growth
Performance |
| Timeline |
| Nasdaq 100 2x |
| Sit Esg Growth |
Nasdaq-100(r) and Sit Esg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Sit Esg
The main advantage of trading using opposite Nasdaq-100(r) and Sit Esg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Sit Esg 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 Sit Esg will offset losses from the drop in Sit Esg'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 |
| Sit Esg vs. Sit Small Cap | Sit Esg vs. Sit Global Dividend | Sit Esg vs. Sit Small Cap | Sit Esg vs. Sit Developing Markets |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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