Correlation Between Nasdaq-100(r) and Via Renewables

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

Diversification Opportunities for Nasdaq-100(r) and Via Renewables

0.42

Correlation Coefficient

Nasdaq-100(r)  Via Renewables

Very weak diversification

The 3 months correlation between Nasdaq-100(r) and Via is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables 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 Via Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Renewables has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Via Renewables go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Via Renewables

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 0.76 times more return on investment than Via Renewables. However, Nasdaq 100 2x Strategy is 1.31 times less risky than Via Renewables. It trades about 0.1 of its potential returns per unit of risk. Via Renewables is currently generating about 0.03 per unit of risk. If you would invest  21,039  in Nasdaq 100 2x Strategy on October 5, 2024 and sell it today you would earn a total of  33,804  from holding Nasdaq 100 2x Strategy or generate 160.67% return on investment over 90 days.

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

Nasdaq 100 2x Strategy  vs.  Via Renewables

Nasdaq 100 2x

Risk-Adjusted Performance

3 of 100

Weak

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 strong essential 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.

Via Renewables

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq-100(r) and Via Renewables

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

The idea behind Nasdaq 100 2x Strategy and Via Renewables 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.