Correlation Between Micro Silver and Nasdaq 100

Can any of the company-specific risk be diversified away by investing in both Micro Silver and Nasdaq 100 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 Micro Silver and Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Micro Silver Futures and Nasdaq 100, you can compare the effects of market volatilities on Micro Silver and Nasdaq 100 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 Micro Silver with a short position of Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micro Silver and Nasdaq 100.

Diversification Opportunities for Micro Silver and Nasdaq 100

-0.5

Correlation Coefficient

Micro Silver  Nasdaq 100

Very good diversification

The 3 months correlation between Micro and Nasdaq is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Micro Silver Futures and Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 and Micro Silver 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 Micro Silver Futures are associated (or correlated) with Nasdaq 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 has no effect on the direction of Micro Silver i.e., Micro Silver and Nasdaq 100 go up and down completely randomly.

Pair Corralation between Micro Silver and Nasdaq 100

Assuming the 90 days trading horizon Micro Silver Futures is expected to generate 0.99 times more return on investment than Nasdaq 100. However, Micro Silver Futures is 1.01 times less risky than Nasdaq 100. It trades about 0.18 of its potential returns per unit of risk. Nasdaq 100 is currently generating about -0.1 per unit of risk. If you would invest  2,941  in Micro Silver Futures on December 30, 2024 and sell it today you would earn a total of  540.00  from holding Micro Silver Futures or generate 18.36% return on investment over 90 days.

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

Micro Silver Futures  vs.  Nasdaq 100

Micro Silver Futures

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Micro Silver Futures are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Micro Silver exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nasdaq 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq 100 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Commodity's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Nasdaq 100 shareholders.

Pair Trading with Micro Silver and Nasdaq 100

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

The idea behind Micro Silver Futures and Nasdaq 100 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.