Correlation Between Usaa Nasdaq and Health Care
Can any of the company-specific risk be diversified away by investing in both Usaa Nasdaq and Health Care 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 Usaa Nasdaq and Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Usaa Nasdaq 100 and Health Care Fund, you can compare the effects of market volatilities on Usaa Nasdaq and Health Care 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 Usaa Nasdaq with a short position of Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Usaa Nasdaq and Health Care.
Diversification Opportunities for Usaa Nasdaq and Health Care
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Usaa and HEALTH is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Usaa Nasdaq 100 and Health Care Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Fund and Usaa Nasdaq 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 Usaa Nasdaq 100 are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Fund has no effect on the direction of Usaa Nasdaq i.e., Usaa Nasdaq and Health Care go up and down completely randomly.
Pair Corralation between Usaa Nasdaq and Health Care
Assuming the 90 days horizon Usaa Nasdaq 100 is expected to generate 1.46 times more return on investment than Health Care. However, Usaa Nasdaq is 1.46 times more volatile than Health Care Fund. It trades about 0.03 of its potential returns per unit of risk. Health Care Fund is currently generating about -0.01 per unit of risk. If you would invest 5,239 in Usaa Nasdaq 100 on November 26, 2024 and sell it today you would earn a total of 85.00 from holding Usaa Nasdaq 100 or generate 1.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Usaa Nasdaq 100 vs. Health Care Fund
Performance |
Timeline |
Usaa Nasdaq 100 |
Health Care Fund |
Usaa Nasdaq and Health Care Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Usaa Nasdaq and Health Care
The main advantage of trading using opposite Usaa Nasdaq and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Usaa Nasdaq position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.Usaa Nasdaq vs. Franklin Natural Resources | ||
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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