Correlation Between Nasdaq 100 and Real Assets

Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Real Assets 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 Real Assets 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 Real Assets Portfolio, you can compare the effects of market volatilities on Nasdaq 100 and Real Assets 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 Real Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Real Assets.

Diversification Opportunities for Nasdaq 100 and Real Assets

-0.24

Correlation Coefficient

Nasdaq 100  Real Assets

Very good diversification

The 3 months correlation between Nasdaq and Real is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Real Assets Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Assets Portfolio 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 2x Strategy are associated (or correlated) with Real Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Assets Portfolio has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Real Assets go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Real Assets

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 3.12 times more return on investment than Real Assets. However, Nasdaq 100 is 3.12 times more volatile than Real Assets Portfolio. It trades about 0.07 of its potential returns per unit of risk. Real Assets Portfolio is currently generating about -0.06 per unit of risk. If you would invest  28,597  in Nasdaq 100 2x Strategy on September 25, 2024 and sell it today you would earn a total of  12,045  from holding Nasdaq 100 2x Strategy or generate 42.12% return on investment over 90 days.

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

Nasdaq 100 2x Strategy  vs.  Real Assets Portfolio

Nasdaq 100 2x

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Nasdaq 100 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Real Assets Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Assets Portfolio 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Nasdaq 100 and Real Assets

The main advantage of trading using opposite Nasdaq 100 and Real Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Real Assets 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 Real Assets will offset losses from the drop in Real Assets' long position.

The idea behind Nasdaq 100 2x Strategy and Real Assets Portfolio 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.