Correlation Between Nasdaq 100 and Vanguard Wellington
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Vanguard Wellington 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 Vanguard Wellington 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 Wellington Fund, you can compare the effects of market volatilities on Nasdaq 100 and Vanguard Wellington 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 Vanguard Wellington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Vanguard Wellington.
Diversification Opportunities for Nasdaq 100 and Vanguard Wellington
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq and Vanguard is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Vanguard Wellington Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Wellington 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 Vanguard Wellington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Wellington has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Vanguard Wellington go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Vanguard Wellington
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 4.04 times more return on investment than Vanguard Wellington. However, Nasdaq 100 is 4.04 times more volatile than Vanguard Wellington Fund. It trades about 0.08 of its potential returns per unit of risk. Vanguard Wellington Fund is currently generating about 0.12 per unit of risk. If you would invest 55,303 in Nasdaq 100 2x Strategy on August 27, 2024 and sell it today you would earn a total of 1,955 from holding Nasdaq 100 2x Strategy or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Vanguard Wellington Fund
Performance |
| Timeline |
| Nasdaq 100 2x |
| Vanguard Wellington |
Nasdaq 100 and Vanguard Wellington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Vanguard Wellington
The main advantage of trading using opposite Nasdaq 100 and Vanguard Wellington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Vanguard Wellington 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 Wellington will offset losses from the drop in Vanguard Wellington's long position.| Nasdaq 100 vs. Direxion Monthly Nasdaq 100 | Nasdaq 100 vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Nasdaq 100 vs. Dow 2x Strategy |
| Vanguard Wellington vs. Vanguard Wellesley Income | Vanguard Wellington vs. Vanguard Windsor Ii | Vanguard Wellington vs. Vanguard International Growth | Vanguard Wellington vs. Vanguard Primecap Fund |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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