Correlation Between Usaa Nasdaq and Capital Growth

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

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

Diversification Opportunities for Usaa Nasdaq and Capital Growth

0.53

Correlation Coefficient

Usaa Nasdaq  Capital Growth

Very weak diversification

The 3 months correlation between Usaa and Capital is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Usaa Nasdaq 100 and Capital Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Growth and Usaa Nasdaq 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 Usaa Nasdaq 100 are associated (or correlated) with Capital Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Growth has no effect on the direction of Usaa Nasdaq i.e., Usaa Nasdaq and Capital Growth go up and down completely randomly.

Pair Corralation between Usaa Nasdaq and Capital Growth

Assuming the 90 days horizon Usaa Nasdaq 100 is expected to under-perform the Capital Growth. In addition to that, Usaa Nasdaq is 1.9 times more volatile than Capital Growth Fund. It trades about -0.17 of its total potential returns per unit of risk. Capital Growth Fund is currently generating about -0.03 per unit of volatility. If you would invest  1,282  in Capital Growth Fund on December 5, 2024 and sell it today you would lose (5.00) from holding Capital Growth Fund or give up 0.39% of portfolio value over 90 days.

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

Usaa Nasdaq 100  vs.  Capital Growth Fund

Usaa Nasdaq 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days Usaa Nasdaq 100 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Capital Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital Growth Fund 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 technical and fundamental 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.

Pair Trading with Usaa Nasdaq and Capital Growth

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

The idea behind Usaa Nasdaq 100 and Capital Growth Fund 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.