Correlation Between Nasdaq-100(r) and Commodityrealreturn

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

Diversification Opportunities for Nasdaq-100(r) and Commodityrealreturn

-0.34

Correlation Coefficient

Nasdaq-100(r)  Commodityrealreturn

Very good diversification

The 3 months correlation between Nasdaq-100(r) and Commodityrealreturn is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Commodityrealreturn Strategy F in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commodityrealreturn 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 Commodityrealreturn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commodityrealreturn has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Commodityrealreturn go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Commodityrealreturn

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 2.7 times more return on investment than Commodityrealreturn. However, Nasdaq-100(r) is 2.7 times more volatile than Commodityrealreturn Strategy Fund. It trades about 0.07 of its potential returns per unit of risk. Commodityrealreturn Strategy Fund is currently generating about 0.04 per unit of risk. If you would invest  26,476  in Nasdaq 100 2x Strategy on October 11, 2024 and sell it today you would earn a total of  12,785  from holding Nasdaq 100 2x Strategy or generate 48.29% 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.  Commodityrealreturn Strategy F

Nasdaq 100 2x

Risk-Adjusted Performance

0 of 100

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 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.

Commodityrealreturn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commodityrealreturn Strategy Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Commodityrealreturn is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq-100(r) and Commodityrealreturn

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

The idea behind Nasdaq 100 2x Strategy and Commodityrealreturn Strategy 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.