Correlation Between Nasdaq-100(r) and Classic Value

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Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Classic Value 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(r) and Classic Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Classic Value Fund, you can compare the effects of market volatilities on Nasdaq-100(r) and Classic Value 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(r) with a short position of Classic Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Classic Value.

Diversification Opportunities for Nasdaq-100(r) and Classic Value

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nasdaq-100(r) and Classic is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Classic Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Classic Value and Nasdaq-100(r) 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 2x Strategy are associated (or correlated) with Classic Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Classic Value has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Classic Value go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Classic Value

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 0.62 times more return on investment than Classic Value. However, Nasdaq 100 2x Strategy is 1.62 times less risky than Classic Value. It trades about 0.04 of its potential returns per unit of risk. Classic Value Fund is currently generating about -0.11 per unit of risk. If you would invest  39,793  in Nasdaq 100 2x Strategy on October 28, 2024 and sell it today you would earn a total of  1,502  from holding Nasdaq 100 2x Strategy or generate 3.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Nasdaq 100 2x Strategy  vs.  Classic Value Fund

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -30-20-10010
JavaScript chart by amCharts 3.21.15RYCCX JCVIX
       Timeline  
Nasdaq 100 2x 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
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 fundamental indicators, Nasdaq-100(r) is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan380390400410420430440450
Classic Value 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Classic Value Fund 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 forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2426283032343638

Nasdaq-100(r) and Classic Value Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.94-5.95-3.95-1.960.01.963.996.028.0510.08 0.020.030.040.050.06
JavaScript chart by amCharts 3.21.15RYCCX JCVIX
       Returns  

Pair Trading with Nasdaq-100(r) and Classic Value

The main advantage of trading using opposite Nasdaq-100(r) and Classic Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Classic Value 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 Classic Value will offset losses from the drop in Classic Value's long position.
The idea behind Nasdaq 100 2x Strategy and Classic Value Fund 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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