Correlation Between Nasdaq-100(r) and Vanguard Growth
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Vanguard Growth 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 Vanguard Growth 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 Vanguard Growth Index, you can compare the effects of market volatilities on Nasdaq-100(r) and Vanguard Growth 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 Vanguard Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Vanguard Growth.
Diversification Opportunities for Nasdaq-100(r) and Vanguard Growth
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq-100(r) and VANGUARD is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Vanguard Growth Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Growth Index 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 Vanguard Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Growth Index has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Vanguard Growth go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Vanguard Growth
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to under-perform the Vanguard Growth. In addition to that, Nasdaq-100(r) is 2.1 times more volatile than Vanguard Growth Index. It trades about -0.09 of its total potential returns per unit of risk. Vanguard Growth Index is currently generating about -0.18 per unit of volatility. If you would invest 21,736 in Vanguard Growth Index on November 29, 2024 and sell it today you would lose (695.00) from holding Vanguard Growth Index or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Vanguard Growth Index
Performance |
| Timeline |
| Nasdaq 100 2x |
| Vanguard Growth Index |
Nasdaq-100(r) and Vanguard Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Vanguard Growth
The main advantage of trading using opposite Nasdaq-100(r) and Vanguard Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Vanguard Growth 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 Vanguard Growth will offset losses from the drop in Vanguard Growth'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 |
| Vanguard Growth vs. Upright Assets Allocation | Vanguard Growth vs. Guidemark Large Cap | Vanguard Growth vs. Washington Mutual Investors | Vanguard Growth vs. Dodge Cox Stock |
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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