Correlation Between Target Retirement and Usaa Nasdaq

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

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

Diversification Opportunities for Target Retirement and Usaa Nasdaq

0.39

Correlation Coefficient

Target Retirement  Usaa Nasdaq

Weak diversification

The 3 months correlation between Target and Usaa is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Target Retirement Income and Usaa Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usaa Nasdaq 100 and Target Retirement 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 Target Retirement Income are associated (or correlated) with Usaa Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usaa Nasdaq 100 has no effect on the direction of Target Retirement i.e., Target Retirement and Usaa Nasdaq go up and down completely randomly.

Pair Corralation between Target Retirement and Usaa Nasdaq

Assuming the 90 days horizon Target Retirement Income is expected to generate 0.23 times more return on investment than Usaa Nasdaq. However, Target Retirement Income is 4.38 times less risky than Usaa Nasdaq. It trades about 0.17 of its potential returns per unit of risk. Usaa Nasdaq 100 is currently generating about -0.17 per unit of risk. If you would invest  1,088  in Target Retirement Income on December 5, 2024 and sell it today you would earn a total of  11.00  from holding Target Retirement Income or generate 1.01% return on investment over 90 days.

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

Target Retirement Income  vs.  Usaa Nasdaq 100

Target Retirement Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Target Retirement Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Target Retirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Target Retirement and Usaa Nasdaq

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

The idea behind Target Retirement Income and Usaa 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.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.