Correlation Between Nasdaq 100 and Sp Smallcap
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Sp Smallcap 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 Sp Smallcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Sp Smallcap Index, you can compare the effects of market volatilities on Nasdaq 100 and Sp Smallcap 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 Sp Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Sp Smallcap.
Diversification Opportunities for Nasdaq 100 and Sp Smallcap
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nasdaq and SMCIX is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Sp Smallcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Smallcap Index 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 2x Strategy are associated (or correlated) with Sp Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Smallcap Index has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Sp Smallcap go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Sp Smallcap
Assuming the 90 days horizon Nasdaq 100 is expected to generate 2.13 times less return on investment than Sp Smallcap. In addition to that, Nasdaq 100 is 1.4 times more volatile than Sp Smallcap Index. It trades about 0.07 of its total potential returns per unit of risk. Sp Smallcap Index is currently generating about 0.2 per unit of volatility. If you would invest 2,108 in Sp Smallcap Index on May 31, 2025 and sell it today you would earn a total of 129.00 from holding Sp Smallcap Index or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Sp Smallcap Index
Performance |
| Timeline |
| Nasdaq 100 2x |
| Sp Smallcap Index |
Nasdaq 100 and Sp Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Sp Smallcap
The main advantage of trading using opposite Nasdaq 100 and Sp Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Sp Smallcap 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 Sp Smallcap will offset losses from the drop in Sp Smallcap's long position.| Nasdaq 100 vs. Gurtin California Muni | Nasdaq 100 vs. Access Capital Munity | Nasdaq 100 vs. California Municipal Portfolio | Nasdaq 100 vs. Virtus Seix Government |
| Sp Smallcap vs. Sp Midcap Index | Sp Smallcap vs. Sp 500 Index | Sp Smallcap vs. Nasdaq 100 Index Fund | Sp Smallcap vs. Deutsche Sp 500 |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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