Correlation Between Nasdaq 100 and Guggenheim Large

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

By analyzing existing cross correlation between Nasdaq 100 Index Fund and Guggenheim Large Cap, you can compare the effects of market volatilities on Nasdaq 100 and Guggenheim Large 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 Guggenheim Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Guggenheim Large.

Diversification Opportunities for Nasdaq 100 and Guggenheim Large

0.83

Correlation Coefficient

Nasdaq 100  Guggenheim Large

Very poor diversification

The 3 months correlation between Nasdaq and Guggenheim is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Guggenheim Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Large Cap 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 Index Fund are associated (or correlated) with Guggenheim Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Large Cap has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Guggenheim Large go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Guggenheim Large

Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 1.61 times more return on investment than Guggenheim Large. However, Nasdaq 100 is 1.61 times more volatile than Guggenheim Large Cap. It trades about 0.18 of its potential returns per unit of risk. Guggenheim Large Cap is currently generating about 0.11 per unit of risk. If you would invest  4,879  in Nasdaq 100 Index Fund on September 15, 2024 and sell it today you would earn a total of  557.00  from holding Nasdaq 100 Index Fund or generate 11.42% return on investment over 90 days.

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

Nasdaq 100 Index Fund  vs.  Guggenheim Large Cap

Nasdaq 100 Index

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 Index Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nasdaq 100 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Guggenheim Large Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guggenheim Large Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Guggenheim Large 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 Guggenheim Large

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

The idea behind Nasdaq 100 Index Fund and Guggenheim Large Cap 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.