Correlation Between Nasdaq-100(r) and Volumetric Fund

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

Diversification Opportunities for Nasdaq-100(r) and Volumetric Fund

0.91

Correlation Coefficient

Nasdaq-100(r)  Volumetric Fund

Almost no diversification

The 3 months correlation between Nasdaq-100(r) and Volumetric is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Volumetric Fund Volumetric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volumetric Fund Volu 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 Volumetric Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volumetric Fund Volu has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Volumetric Fund go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Volumetric Fund

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to under-perform the Volumetric Fund. In addition to that, Nasdaq-100(r) is 3.28 times more volatile than Volumetric Fund Volumetric. It trades about -0.11 of its total potential returns per unit of risk. Volumetric Fund Volumetric is currently generating about -0.12 per unit of volatility. If you would invest  2,388  in Volumetric Fund Volumetric on December 30, 2024 and sell it today you would lose (147.00) from holding Volumetric Fund Volumetric or give up 6.16% of portfolio value over 90 days.

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

Nasdaq 100 2x Strategy  vs.  Volumetric Fund Volumetric

Nasdaq 100 2x

Risk-Adjusted Performance

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 weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Volumetric Fund Volu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Volumetric Fund Volumetric has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Volumetric Fund 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 Volumetric Fund

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

The idea behind Nasdaq 100 2x Strategy and Volumetric Fund Volumetric 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.