Correlation Between Nasdaq 100 and Investment Managers
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Investment Managers 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 Investment Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Index Fund and Investment Managers Series, you can compare the effects of market volatilities on Nasdaq 100 and Investment Managers 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 Investment Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Investment Managers.
Diversification Opportunities for Nasdaq 100 and Investment Managers
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nasdaq and Investment is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Investment Managers Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Managers 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 Index Fund are associated (or correlated) with Investment Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Managers has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Investment Managers go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Investment Managers
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 0.47 times more return on investment than Investment Managers. However, Nasdaq 100 Index Fund is 2.11 times less risky than Investment Managers. It trades about 0.25 of its potential returns per unit of risk. Investment Managers Series is currently generating about -0.12 per unit of risk. If you would invest 4,998 in Nasdaq 100 Index Fund on September 1, 2024 and sell it today you would earn a total of 264.00 from holding Nasdaq 100 Index Fund or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Investment Managers Series
Performance |
| Timeline |
| Nasdaq 100 Index |
| Investment Managers |
Nasdaq 100 and Investment Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Investment Managers
The main advantage of trading using opposite Nasdaq 100 and Investment Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Investment Managers 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 Investment Managers will offset losses from the drop in Investment Managers' long position.| Nasdaq 100 vs. Alliancebernstein National Municipal | Nasdaq 100 vs. Nuveen Arizona Municipal | Nasdaq 100 vs. Bbh Intermediate Municipal | Nasdaq 100 vs. Old Westbury Municipal |
| Investment Managers vs. Ep Emerging Markets | Investment Managers vs. Europac International Bond | Investment Managers vs. Europac International Dividend | Investment Managers vs. Ep Emerging Markets |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |