Correlation Between Nasdaq 100 and Growth Income
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Growth Income 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 Growth Income 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 Growth Income Fund, you can compare the effects of market volatilities on Nasdaq 100 and Growth Income 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 Growth Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Growth Income.
Diversification Opportunities for Nasdaq 100 and Growth Income
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq and Growth is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Growth Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Income 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 Growth Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Income has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Growth Income go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Growth Income
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 1.54 times more return on investment than Growth Income. However, Nasdaq 100 is 1.54 times more volatile than Growth Income Fund. It trades about 0.16 of its potential returns per unit of risk. Growth Income Fund is currently generating about 0.19 per unit of risk. If you would invest 4,760 in Nasdaq 100 Index Fund on September 2, 2024 and sell it today you would earn a total of 502.00 from holding Nasdaq 100 Index Fund or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Growth Income Fund
Performance |
| Timeline |
| Nasdaq 100 Index |
| Growth Income |
Nasdaq 100 and Growth Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Growth Income
The main advantage of trading using opposite Nasdaq 100 and Growth Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Growth Income 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 Growth Income will offset losses from the drop in Growth Income's long position.| Nasdaq 100 vs. Pimco Global Multi Asset | Nasdaq 100 vs. Commonwealth Global Fund | Nasdaq 100 vs. Mirova Global Green | Nasdaq 100 vs. T Rowe Price |
| Growth Income vs. Calamos Short Term Bond | Growth Income vs. Ab Impact Municipal | Growth Income vs. Ab Bond Inflation | Growth Income vs. T Rowe Price |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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