Correlation Between One Rock and Nasdaq 100

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

By analyzing existing cross correlation between One Rock Fund and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on One Rock 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 One Rock with a short position of Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Rock and Nasdaq 100.

Diversification Opportunities for One Rock and Nasdaq 100

0.79

Correlation Coefficient

One Rock  Nasdaq 100

Poor diversification

The 3 months correlation between One and Nasdaq is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding One Rock Fund 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 One Rock 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 One Rock Fund 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 One Rock i.e., One Rock and Nasdaq 100 go up and down completely randomly.

Pair Corralation between One Rock and Nasdaq 100

Assuming the 90 days horizon One Rock is expected to generate 1.53 times less return on investment than Nasdaq 100. In addition to that, One Rock is 1.37 times more volatile than Nasdaq 100 2x Strategy. It trades about 0.02 of its total potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.03 per unit of volatility. If you would invest  55,082  in Nasdaq 100 2x Strategy on October 9, 2024 and sell it today you would earn a total of  1,567  from holding Nasdaq 100 2x Strategy or generate 2.84% return on investment over 90 days.

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

One Rock Fund  vs.  Nasdaq 100 2x Strategy

One Rock Fund

Risk-Adjusted Performance

1 of 100

Weak

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

Nasdaq 100 2x

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nasdaq 100 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with One Rock and Nasdaq 100

The main advantage of trading using opposite One Rock and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Rock 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.

The idea behind One Rock Fund and Nasdaq 100 2x Strategy 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.