Correlation Between Monthly Rebalance and Nasdaq-100(r)

Can any of the company-specific risk be diversified away by investing in both Monthly Rebalance 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 Monthly Rebalance 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 Monthly Rebalance Nasdaq 100 and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Monthly Rebalance 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 Monthly Rebalance with a short position of Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Monthly Rebalance and Nasdaq-100(r).

Diversification Opportunities for Monthly Rebalance and Nasdaq-100(r)

1.0

Correlation Coefficient

Monthly Rebalance  Nasdaq-100(r)

No risk reduction

The 3 months correlation between Monthly and Nasdaq-100(r) is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Monthly Rebalance Nasdaq 100 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 Monthly Rebalance 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 Monthly Rebalance Nasdaq 100 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 Monthly Rebalance i.e., Monthly Rebalance and Nasdaq-100(r) go up and down completely randomly.

Pair Corralation between Monthly Rebalance and Nasdaq-100(r)

Assuming the 90 days horizon Monthly Rebalance Nasdaq 100 is expected to generate 0.99 times more return on investment than Nasdaq-100(r). However, Monthly Rebalance Nasdaq 100 is 1.01 times less risky than Nasdaq-100(r). It trades about 0.15 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.15 per unit of risk. If you would invest  52,909  in Monthly Rebalance Nasdaq 100 on September 2, 2024 and sell it today you would earn a total of  10,613  from holding Monthly Rebalance Nasdaq 100 or generate 20.06% return on investment over 90 days.

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

Monthly Rebalance Nasdaq 100  vs.  Nasdaq 100 2x Strategy

Monthly Rebalance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monthly Rebalance Nasdaq 100 are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Monthly Rebalance showed solid returns over the last few months and may actually be approaching a breakup point.

Nasdaq 100 2x

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Nasdaq-100(r) showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monthly Rebalance and Nasdaq-100(r)

The main advantage of trading using opposite Monthly Rebalance and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monthly Rebalance 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 Monthly Rebalance Nasdaq 100 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.