Correlation Between Nasdaq-100 Index and Gmo Resources
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Index and Gmo Resources 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 Index and Gmo Resources 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 Gmo Resources, you can compare the effects of market volatilities on Nasdaq-100 Index and Gmo Resources 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 Index with a short position of Gmo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Index and Gmo Resources.
Diversification Opportunities for Nasdaq-100 Index and Gmo Resources
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nasdaq-100 and Gmo is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Gmo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Resources and Nasdaq-100 Index 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 Gmo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Resources has no effect on the direction of Nasdaq-100 Index i.e., Nasdaq-100 Index and Gmo Resources go up and down completely randomly.
Pair Corralation between Nasdaq-100 Index and Gmo Resources
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 1.05 times more return on investment than Gmo Resources. However, Nasdaq-100 Index is 1.05 times more volatile than Gmo Resources. It trades about -0.02 of its potential returns per unit of risk. Gmo Resources is currently generating about -0.06 per unit of risk. If you would invest 5,216 in Nasdaq 100 Index Fund on November 30, 2024 and sell it today you would lose (74.00) from holding Nasdaq 100 Index Fund or give up 1.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.56% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Gmo Resources
Performance |
| Timeline |
| Nasdaq 100 Index |
| Gmo Resources |
Nasdaq-100 Index and Gmo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100 Index and Gmo Resources
The main advantage of trading using opposite Nasdaq-100 Index and Gmo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Index position performs unexpectedly, Gmo Resources 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 Gmo Resources will offset losses from the drop in Gmo Resources' long position.| Nasdaq-100 Index vs. Pace High Yield | Nasdaq-100 Index vs. Buffalo High Yield | Nasdaq-100 Index vs. Mainstay High Yield | Nasdaq-100 Index vs. Multi Manager High Yield |
| Gmo Resources vs. John Hancock Money | Gmo Resources vs. Jpmorgan Trust I | Gmo Resources vs. Transamerica Funds | Gmo Resources vs. Prudential 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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