Correlation Between Davenport Small and Nasdaq-100 Fund

Can any of the company-specific risk be diversified away by investing in both Davenport Small and Nasdaq-100 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 Davenport Small and Nasdaq-100 Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Davenport Small Cap and Nasdaq 100 Fund Investor, you can compare the effects of market volatilities on Davenport Small and Nasdaq-100 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 Davenport Small with a short position of Nasdaq-100 Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davenport Small and Nasdaq-100 Fund.

Diversification Opportunities for Davenport Small and Nasdaq-100 Fund

0.78

Correlation Coefficient

Davenport Small  Nasdaq-100 Fund

Poor diversification

The 3 months correlation between Davenport and Nasdaq-100 is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Davenport Small Cap and Nasdaq 100 Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Fund and Davenport Small 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 Davenport Small Cap are associated (or correlated) with Nasdaq-100 Fund. 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 Davenport Small i.e., Davenport Small and Nasdaq-100 Fund go up and down completely randomly.

Pair Corralation between Davenport Small and Nasdaq-100 Fund

Assuming the 90 days horizon Davenport Small Cap is expected to under-perform the Nasdaq-100 Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Davenport Small Cap is 2.02 times less risky than Nasdaq-100 Fund. The mutual fund trades about -0.38 of its potential returns per unit of risk. The Nasdaq 100 Fund Investor is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  8,995  in Nasdaq 100 Fund Investor on October 9, 2024 and sell it today you would lose (639.00) from holding Nasdaq 100 Fund Investor or give up 7.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Davenport Small Cap  vs.  Nasdaq 100 Fund Investor

Davenport Small Cap

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Davenport Small Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Davenport Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nasdaq 100 Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nasdaq 100 Fund Investor has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Nasdaq-100 Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Davenport Small and Nasdaq-100 Fund

The main advantage of trading using opposite Davenport Small and Nasdaq-100 Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davenport Small position performs unexpectedly, Nasdaq-100 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 Nasdaq-100 Fund will offset losses from the drop in Nasdaq-100 Fund's long position.

The idea behind Davenport Small Cap and Nasdaq 100 Fund Investor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.