Correlation Between Nasdaq-100(r) and Leland Thomson

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

Diversification Opportunities for Nasdaq-100(r) and Leland Thomson

0.91

Correlation Coefficient

Nasdaq-100(r)  Leland Thomson

Almost no diversification

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

Pair Corralation between Nasdaq-100(r) and Leland Thomson

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to under-perform the Leland Thomson. In addition to that, Nasdaq-100(r) is 1.22 times more volatile than Leland Thomson Reuters. It trades about -0.08 of its total potential returns per unit of risk. Leland Thomson Reuters is currently generating about -0.04 per unit of volatility. If you would invest  2,488  in Leland Thomson Reuters on December 28, 2024 and sell it today you would lose (156.00) from holding Leland Thomson Reuters or give up 6.27% 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.  Leland Thomson Reuters

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 essential 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.

Leland Thomson Reuters

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leland Thomson Reuters has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Leland Thomson 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 Leland Thomson

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

The idea behind Nasdaq 100 2x Strategy and Leland Thomson Reuters 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..