Correlation Between Select Fund and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both Select Fund 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 Select Fund and Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Fund C and Nasdaq 100 Fund Class, you can compare the effects of market volatilities on Select Fund 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 Select Fund with a short position of Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Fund and Nasdaq 100.
Diversification Opportunities for Select Fund and Nasdaq 100
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Select and Nasdaq is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Select Fund C and Nasdaq 100 Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Fund and Select Fund 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 Select Fund C 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 Fund has no effect on the direction of Select Fund i.e., Select Fund and Nasdaq 100 go up and down completely randomly.
Pair Corralation between Select Fund and Nasdaq 100
Assuming the 90 days horizon Select Fund C is expected to under-perform the Nasdaq 100. But the mutual fund apears to be less risky and, when comparing its historical volatility, Select Fund C is 1.01 times less risky than Nasdaq 100. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Nasdaq 100 Fund Class is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 7,411 in Nasdaq 100 Fund Class on October 22, 2024 and sell it today you would lose (28.00) from holding Nasdaq 100 Fund Class or give up 0.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Select Fund C vs. Nasdaq 100 Fund Class
Performance |
Timeline |
Select Fund C |
Nasdaq 100 Fund |
Select Fund and Nasdaq 100 Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Select Fund and Nasdaq 100
The main advantage of trading using opposite Select Fund and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Fund 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.Select Fund vs. Morningstar Municipal Bond | Select Fund vs. Transamerica Intermediate Muni | Select Fund vs. Old Westbury Municipal | Select Fund vs. Intermediate Term Tax Free Bond |
Nasdaq 100 vs. Nasdaq 100 Fund Class | Nasdaq 100 vs. Nasdaq 100 Fund Class | Nasdaq 100 vs. Nasdaq 100 2x Strategy | 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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