Correlation Between Nasdaq 100 and Apple
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Nasdaq 100 and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Apple.
Diversification Opportunities for Nasdaq 100 and Apple
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nasdaq-100 and Apple is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Apple go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Apple
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 0.52 times more return on investment than Apple. However, Nasdaq 100 Index Fund is 1.92 times less risky than Apple. It trades about -0.07 of its potential returns per unit of risk. Apple Inc is currently generating about -0.06 per unit of risk. If you would invest 4,503 in Nasdaq 100 Index Fund on January 18, 2024 and sell it today you would lose (67.00) from holding Nasdaq 100 Index Fund or give up 1.49% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Nasdaq 100 Index Fund vs. Apple Inc
Performance |
Timeline |
Nasdaq 100 Index |
Apple Inc |
Nasdaq 100 and Apple Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nasdaq 100 and Apple
The main advantage of trading using opposite Nasdaq 100 and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.Nasdaq 100 vs. Sp 500 Index | Nasdaq 100 vs. Science Technology Fund | Nasdaq 100 vs. Extended Market Index | Nasdaq 100 vs. World Growth Fund |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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