Correlation Between Growth Opportunities and Nasdaq-100 Index
Can any of the company-specific risk be diversified away by investing in both Growth Opportunities and Nasdaq-100 Index 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 Growth Opportunities and Nasdaq-100 Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Opportunities Fund and Nasdaq 100 Index Fund, you can compare the effects of market volatilities on Growth Opportunities and Nasdaq-100 Index 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 Growth Opportunities with a short position of Nasdaq-100 Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Opportunities and Nasdaq-100 Index.
Diversification Opportunities for Growth Opportunities and Nasdaq-100 Index
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Growth and Nasdaq-100 is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Growth Opportunities Fund and Nasdaq 100 Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Index and Growth Opportunities 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 Growth Opportunities Fund are associated (or correlated) with Nasdaq-100 Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 Index has no effect on the direction of Growth Opportunities i.e., Growth Opportunities and Nasdaq-100 Index go up and down completely randomly.
Pair Corralation between Growth Opportunities and Nasdaq-100 Index
Assuming the 90 days horizon Growth Opportunities Fund is expected to generate 0.9 times more return on investment than Nasdaq-100 Index. However, Growth Opportunities Fund is 1.12 times less risky than Nasdaq-100 Index. It trades about 0.11 of its potential returns per unit of risk. Nasdaq 100 Index Fund is currently generating about 0.1 per unit of risk. If you would invest 3,358 in Growth Opportunities Fund on September 3, 2024 and sell it today you would earn a total of 2,498 from holding Growth Opportunities Fund or generate 74.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Opportunities Fund vs. Nasdaq 100 Index Fund
Performance |
| Timeline |
| Growth Opportunities |
| Nasdaq 100 Index |
Growth Opportunities and Nasdaq-100 Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Opportunities and Nasdaq-100 Index
The main advantage of trading using opposite Growth Opportunities and Nasdaq-100 Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Opportunities position performs unexpectedly, Nasdaq-100 Index 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 Nasdaq-100 Index will offset losses from the drop in Nasdaq-100 Index's long position.| Growth Opportunities vs. Victory Rs Partners | Growth Opportunities vs. Lord Abbett Small | Growth Opportunities vs. Hennessy Nerstone Mid | Growth Opportunities vs. Fpa Queens Road |
| Nasdaq-100 Index vs. Highland Longshort Healthcare | Nasdaq-100 Index vs. Tekla Healthcare Opportunities | Nasdaq-100 Index vs. Health Biotchnology Portfolio | Nasdaq-100 Index vs. Delaware Healthcare 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Transaction History View history of all your transactions and understand their impact on performance |