Correlation Between Nasdaq-100(r) and Aquagold International

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

Diversification Opportunities for Nasdaq-100(r) and Aquagold International

-0.09

Correlation Coefficient

Nasdaq-100(r)  Aquagold International

Good diversification

The 3 months correlation between Nasdaq-100(r) and Aquagold is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International 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 Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Aquagold International go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Aquagold International

Assuming the 90 days horizon Nasdaq-100(r) is expected to generate 12.47 times less return on investment than Aquagold International. But when comparing it to its historical volatility, Nasdaq 100 2x Strategy is 22.17 times less risky than Aquagold International. It trades about 0.1 of its potential returns per unit of risk. Aquagold International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Aquagold International on October 5, 2024 and sell it today you would lose (16.96) from holding Aquagold International or give up 99.76% of portfolio value over 90 days.

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

Nasdaq 100 2x Strategy  vs.  Aquagold International

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 weak basic indicators, Nasdaq-100(r) may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Nasdaq-100(r) and Aquagold International

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

The idea behind Nasdaq 100 2x Strategy and Aquagold International 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.