Correlation Between Growth Fund and Nasdaq-100 Index

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Can any of the company-specific risk be diversified away by investing in both Growth Fund and Nasdaq-100 Index 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 Growth Fund and Nasdaq-100 Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Nasdaq 100 Index Fund, you can compare the effects of market volatilities on Growth Fund and Nasdaq-100 Index 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 Growth Fund with a short position of Nasdaq-100 Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Nasdaq-100 Index.

Diversification Opportunities for Growth Fund and Nasdaq-100 Index

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Growth and NASDAQ-100 is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding GROWTH FUND OF and NASDAQ-100 INDEX FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq-100 Index Fund and Growth Fund 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 Growth Fund Of are associated (or correlated) with Nasdaq-100 Index. 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 Index Fund has no effect on the direction of Growth Fund i.e., Growth Fund and Nasdaq-100 Index go up and down completely randomly.

Pair Corralation between Growth Fund and Nasdaq-100 Index

Assuming the 90 days horizon Growth Fund Of is expected to generate 0.84 times more return on investment than Nasdaq-100 Index. However, Growth Fund Of is 1.19 times less risky than Nasdaq-100 Index. It trades about 0.21 of its potential returns per unit of risk. Nasdaq 100 Index Fund is currently generating about 0.09 per unit of risk. If you would invest  5,981  in Growth Fund Of on December 29, 2023 and sell it today you would earn a total of  219.00  from holding Growth Fund Of or generate 3.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

GROWTH FUND OF  vs.  NASDAQ-100 INDEX FUND

 Performance 
       Timeline  
Growth Fund 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Growth Fund Of are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Growth Fund may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Nasdaq-100 Index Fund 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 Index Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Nasdaq-100 Index may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Growth Fund and Nasdaq-100 Index Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Growth Fund and Nasdaq-100 Index

The main advantage of trading using opposite Growth Fund and Nasdaq-100 Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Nasdaq-100 Index 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 Index will offset losses from the drop in Nasdaq-100 Index's long position.
The idea behind Growth Fund Of and Nasdaq 100 Index 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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