Correlation Between NYSE Composite and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Nasdaq 100 Index Fund, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Nasdaq 100.
Diversification Opportunities for NYSE Composite and Nasdaq 100
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Nasdaq is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Nasdaq 100 Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Index and NYSE Composite 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 NYSE Composite 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 Index has no effect on the direction of NYSE Composite i.e., NYSE Composite and Nasdaq 100 go up and down completely randomly.
Pair Corralation between NYSE Composite and Nasdaq 100
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.19 times less return on investment than Nasdaq 100. But when comparing it to its historical volatility, NYSE Composite is 1.68 times less risky than Nasdaq 100. It trades about 0.13 of its potential returns per unit of risk. Nasdaq 100 Index Fund is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,586 in Nasdaq 100 Index Fund on September 12, 2024 and sell it today you would earn a total of 272.00 from holding Nasdaq 100 Index Fund or generate 10.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
NYSE Composite vs. Nasdaq 100 Index Fund
Performance |
Timeline |
NYSE Composite and Nasdaq 100 Volatility Contrast
Predicted Return Density |
Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Nasdaq 100 Index Fund
Pair trading matchups for Nasdaq 100
Pair Trading with NYSE Composite and Nasdaq 100
The main advantage of trading using opposite NYSE Composite and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.NYSE Composite vs. Teleflex Incorporated | NYSE Composite vs. Victorias Secret Co | NYSE Composite vs. Under Armour C | NYSE Composite vs. Steven Madden |
Nasdaq 100 vs. Alliancebernstein Global High | Nasdaq 100 vs. Fa 529 Aggressive | Nasdaq 100 vs. Ppm High Yield | Nasdaq 100 vs. Pace 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |