Correlation Between Nasdaq-100 Index and International Fund
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Index and International Fund 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 International Fund 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 International Fund International, you can compare the effects of market volatilities on Nasdaq-100 Index and International Fund 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 International Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Index and International Fund.
Diversification Opportunities for Nasdaq-100 Index and International Fund
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nasdaq-100 and International is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and International Fund Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Fund 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 International Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Fund has no effect on the direction of Nasdaq-100 Index i.e., Nasdaq-100 Index and International Fund go up and down completely randomly.
Pair Corralation between Nasdaq-100 Index and International Fund
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 1.39 times more return on investment than International Fund. However, Nasdaq-100 Index is 1.39 times more volatile than International Fund International. It trades about 0.1 of its potential returns per unit of risk. International Fund International is currently generating about 0.05 per unit of risk. If you would invest 3,166 in Nasdaq 100 Index Fund on November 2, 2024 and sell it today you would earn a total of 2,123 from holding Nasdaq 100 Index Fund or generate 67.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. International Fund Internation
Performance |
| Timeline |
| Nasdaq 100 Index |
| International Fund |
Nasdaq-100 Index and International Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100 Index and International Fund
The main advantage of trading using opposite Nasdaq-100 Index and International Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Index position performs unexpectedly, International Fund 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 International Fund will offset losses from the drop in International Fund's long position.| Nasdaq-100 Index vs. Sp 500 Index | Nasdaq-100 Index vs. Science Technology Fund | Nasdaq-100 Index vs. Extended Market Index | Nasdaq-100 Index vs. World Growth Fund |
| International Fund vs. One Choice Portfolio | International Fund vs. Needham Aggressive Growth | International Fund vs. Aqr Risk Parity | International Fund vs. Siit High Yield |
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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