Correlation Between Nasdaq 100 and Leigh Baldwin

Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Leigh Baldwin 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 and Leigh Baldwin 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 Leigh Baldwin Total, you can compare the effects of market volatilities on Nasdaq 100 and Leigh Baldwin 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 with a short position of Leigh Baldwin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Leigh Baldwin.

Diversification Opportunities for Nasdaq 100 and Leigh Baldwin

0.78

Correlation Coefficient

Nasdaq 100  Leigh Baldwin

Poor diversification

The 3 months correlation between Nasdaq and Leigh is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Leigh Baldwin Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leigh Baldwin Total and Nasdaq 100 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 Leigh Baldwin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leigh Baldwin Total has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Leigh Baldwin go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Leigh Baldwin

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to under-perform the Leigh Baldwin. In addition to that, Nasdaq 100 is 4.72 times more volatile than Leigh Baldwin Total. It trades about -0.18 of its total potential returns per unit of risk. Leigh Baldwin Total is currently generating about -0.35 per unit of volatility. If you would invest  1,117  in Leigh Baldwin Total on October 12, 2024 and sell it today you would lose (48.00) from holding Leigh Baldwin Total or give up 4.3% of portfolio value over 90 days.

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

Nasdaq 100 2x Strategy  vs.  Leigh Baldwin Total

Nasdaq 100 2x

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, Nasdaq 100 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Leigh Baldwin Total

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leigh Baldwin Total has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Leigh Baldwin 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 and Leigh Baldwin

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

The idea behind Nasdaq 100 2x Strategy and Leigh Baldwin Total 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.