Correlation Between Nasdaq-100(r) and Chn Strs

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

Diversification Opportunities for Nasdaq-100(r) and Chn Strs

-0.43

Correlation Coefficient

Nasdaq-100(r)  Chn Strs

Very good diversification

The 3 months correlation between Nasdaq-100(r) and Chn is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Chn Strs Insti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chn Strs Insti 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 Chn Strs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chn Strs Insti has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Chn Strs go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Chn Strs

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 2.93 times more return on investment than Chn Strs. However, Nasdaq-100(r) is 2.93 times more volatile than Chn Strs Insti. It trades about 0.15 of its potential returns per unit of risk. Chn Strs Insti is currently generating about 0.03 per unit of risk. If you would invest  48,645  in Nasdaq 100 2x Strategy on September 2, 2024 and sell it today you would earn a total of  9,416  from holding Nasdaq 100 2x Strategy or generate 19.36% return on investment over 90 days.

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

Nasdaq 100 2x Strategy  vs.  Chn Strs Insti

Nasdaq 100 2x

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Nasdaq-100(r) showed solid returns over the last few months and may actually be approaching a breakup point.

Chn Strs Insti

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chn Strs Insti are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Chn Strs 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 Chn Strs

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

The idea behind Nasdaq 100 2x Strategy and Chn Strs Insti 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.