Correlation Between Western Assets and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both Western Assets 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 Western Assets and Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Assets Emerging and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Western Assets 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 Western Assets with a short position of Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Nasdaq 100.
Diversification Opportunities for Western Assets and Nasdaq 100
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Nasdaq is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x and Western Assets 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 Western Assets Emerging 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 2x has no effect on the direction of Western Assets i.e., Western Assets and Nasdaq 100 go up and down completely randomly.
Pair Corralation between Western Assets and Nasdaq 100
Assuming the 90 days horizon Western Assets is expected to generate 20.22 times less return on investment than Nasdaq 100. But when comparing it to its historical volatility, Western Assets Emerging is 5.95 times less risky than Nasdaq 100. It trades about 0.03 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 55,321 in Nasdaq 100 2x Strategy on August 28, 2024 and sell it today you would earn a total of 2,099 from holding Nasdaq 100 2x Strategy or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Assets Emerging vs. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| Western Assets Emerging |
| Nasdaq 100 2x |
Western Assets and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Nasdaq 100
The main advantage of trading using opposite Western Assets and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets 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.| Western Assets vs. Federated Mdt Large | Western Assets vs. Knights Of Umbus | Western Assets vs. Goldman Sachs Large | Western Assets vs. Qs Large Cap |
| Nasdaq 100 vs. Direxion Monthly Nasdaq 100 | Nasdaq 100 vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Nasdaq 100 vs. Dow 2x Strategy |
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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