Correlation Between Value Fund and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both Value Fund and Nasdaq 100 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 Value Fund and Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Fund Value and Nasdaq 100 Index Fund, you can compare the effects of market volatilities on Value Fund and Nasdaq 100 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 Value Fund with a short position of Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Fund and Nasdaq 100.
Diversification Opportunities for Value Fund and Nasdaq 100
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Value and Nasdaq is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Value Fund Value 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 Value Fund 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 Value Fund Value are associated (or correlated) with Nasdaq 100. 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 Value Fund i.e., Value Fund and Nasdaq 100 go up and down completely randomly.
Pair Corralation between Value Fund and Nasdaq 100
Assuming the 90 days horizon Value Fund Value is expected to generate 0.78 times more return on investment than Nasdaq 100. However, Value Fund Value is 1.29 times less risky than Nasdaq 100. It trades about 0.28 of its potential returns per unit of risk. Nasdaq 100 Index Fund is currently generating about 0.08 per unit of risk. If you would invest 2,134 in Value Fund Value on August 31, 2024 and sell it today you would earn a total of 113.00 from holding Value Fund Value or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Value Fund Value vs. Nasdaq 100 Index Fund
Performance |
| Timeline |
| Value Fund Value |
| Nasdaq 100 Index |
Value Fund and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Fund and Nasdaq 100
The main advantage of trading using opposite Value Fund and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Fund position performs unexpectedly, Nasdaq 100 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 will offset losses from the drop in Nasdaq 100's long position.| Value Fund vs. Us Government Securities | Value Fund vs. Prudential Government Income | Value Fund vs. Aig Government Money | Value Fund vs. Us Government Securities |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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