Correlation Between Nasdaq 100 and Government Long
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Government Long 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 Government Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Fund Class and Government Long Bond, you can compare the effects of market volatilities on Nasdaq 100 and Government Long 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 Government Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Government Long.
Diversification Opportunities for Nasdaq 100 and Government Long
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nasdaq and Government is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Fund Class and Government Long Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Long Bond 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 Fund Class are associated (or correlated) with Government Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Long Bond has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Government Long go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Government Long
Assuming the 90 days horizon Nasdaq 100 Fund Class is expected to generate 0.88 times more return on investment than Government Long. However, Nasdaq 100 Fund Class is 1.13 times less risky than Government Long. It trades about 0.17 of its potential returns per unit of risk. Government Long Bond is currently generating about -0.11 per unit of risk. If you would invest 7,242 in Nasdaq 100 Fund Class on September 12, 2024 and sell it today you would earn a total of 739.00 from holding Nasdaq 100 Fund Class or generate 10.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Nasdaq 100 Fund Class vs. Government Long Bond
Performance |
Timeline |
Nasdaq 100 Fund |
Government Long Bond |
Nasdaq 100 and Government Long Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nasdaq 100 and Government Long
The main advantage of trading using opposite Nasdaq 100 and Government Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Government Long 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 Government Long will offset losses from the drop in Government Long's long position.Nasdaq 100 vs. Nasdaq 100 Fund Class | Nasdaq 100 vs. Nasdaq 100 Fund Class | Nasdaq 100 vs. Nasdaq 100 2x Strategy | Nasdaq 100 vs. Dow 2x Strategy |
Government Long vs. Us Government Plus | Government Long vs. SCOR PK | Government Long vs. Morningstar Unconstrained Allocation | Government Long vs. Via Renewables |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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