Correlation Between Nasdaq 100 and Platinum

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

By analyzing existing cross correlation between Nasdaq 100 and Platinum, you can compare the effects of market volatilities on Nasdaq 100 and Platinum 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 Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Platinum.

Diversification Opportunities for Nasdaq 100 and Platinum

0.02

Correlation Coefficient

Nasdaq 100  Platinum

Significant diversification

The 3 months correlation between Nasdaq and Platinum is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 and Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum 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 are associated (or correlated) with Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Platinum go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Platinum

Assuming the 90 days horizon Nasdaq 100 is expected to under-perform the Platinum. But the commodity apears to be less risky and, when comparing its historical volatility, Nasdaq 100 is 1.08 times less risky than Platinum. The commodity trades about -0.1 of its potential returns per unit of risk. The Platinum is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  91,980  in Platinum on December 30, 2024 and sell it today you would earn a total of  7,630  from holding Platinum or generate 8.3% return on investment over 90 days.

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

Nasdaq 100  vs.  Platinum

Nasdaq 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq 100 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Commodity's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Nasdaq 100 shareholders.

Platinum

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Platinum are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Platinum may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nasdaq 100 and Platinum

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

The idea behind Nasdaq 100 and Platinum 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.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.