Correlation Between Pace Small/medium and Nasdaq-100(r)

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

By analyzing existing cross correlation between Pace Smallmedium Growth and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Pace Small/medium and Nasdaq-100(r) 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 Pace Small/medium with a short position of Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Small/medium and Nasdaq-100(r).

Diversification Opportunities for Pace Small/medium and Nasdaq-100(r)

0.94

Correlation Coefficient

Pace Small/medium  Nasdaq-100(r)

Almost no diversification

The 3 months correlation between Pace and Nasdaq-100(r) is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Growth 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 Pace Small/medium 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 Pace Smallmedium Growth are associated (or correlated) with Nasdaq-100(r). 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 Pace Small/medium i.e., Pace Small/medium and Nasdaq-100(r) go up and down completely randomly.

Pair Corralation between Pace Small/medium and Nasdaq-100(r)

Assuming the 90 days horizon Pace Smallmedium Growth is expected to generate 0.49 times more return on investment than Nasdaq-100(r). However, Pace Smallmedium Growth is 2.06 times less risky than Nasdaq-100(r). It trades about -0.13 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about -0.09 per unit of risk. If you would invest  1,311  in Pace Smallmedium Growth on December 25, 2024 and sell it today you would lose (134.00) from holding Pace Smallmedium Growth or give up 10.22% of portfolio value over 90 days.

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

Pace Smallmedium Growth  vs.  Nasdaq 100 2x Strategy

Pace Smallmedium Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pace Smallmedium Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Nasdaq 100 2x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq 100 2x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Pace Small/medium and Nasdaq-100(r)

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

The idea behind Pace Smallmedium Growth 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.