Correlation Between Nasdaq-100(r) and Great West
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Great West 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 Great West 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 Great West Loomis Sayles, you can compare the effects of market volatilities on Nasdaq-100(r) and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Great West.
Diversification Opportunities for Nasdaq-100(r) and Great West
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq-100(r) and Great is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Great West Loomis Sayles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Loomis 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Loomis has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Great West go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Great West
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 1.9 times more return on investment than Great West. However, Nasdaq-100(r) is 1.9 times more volatile than Great West Loomis Sayles. It trades about 0.09 of its potential returns per unit of risk. Great West Loomis Sayles is currently generating about 0.03 per unit of risk. If you would invest 24,272 in Nasdaq 100 2x Strategy on October 27, 2024 and sell it today you would earn a total of 34,460 from holding Nasdaq 100 2x Strategy or generate 141.97% 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. Great West Loomis Sayles
Performance |
| Timeline |
| Nasdaq 100 2x |
| Great West Loomis |
Nasdaq-100(r) and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Great West
The main advantage of trading using opposite Nasdaq-100(r) and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West'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 |
| Great West vs. Arrow Managed Futures | Great West vs. Credit Suisse Multialternative | Great West vs. Ab Bond Inflation | Great West vs. Atac Inflation Rotation |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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