Correlation Between Nasdaq 100 and Sp Midcap
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Sp Midcap 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 Midcap 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 Midcap Index, you can compare the effects of market volatilities on Nasdaq 100 and Sp Midcap 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 Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Sp Midcap.
Diversification Opportunities for Nasdaq 100 and Sp Midcap
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nasdaq and SPMIX is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Sp Midcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Midcap 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 Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Midcap Index has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Sp Midcap go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Sp Midcap
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 1.96 times more return on investment than Sp Midcap. However, Nasdaq 100 is 1.96 times more volatile than Sp Midcap Index. It trades about 0.38 of its potential returns per unit of risk. Sp Midcap Index is currently generating about 0.24 per unit of risk. If you would invest 39,448 in Nasdaq 100 2x Strategy on April 22, 2025 and sell it today you would earn a total of 22,203 from holding Nasdaq 100 2x Strategy or generate 56.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Sp Midcap Index
Performance |
| Timeline |
| Nasdaq 100 2x |
| Sp Midcap Index |
Nasdaq 100 and Sp Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Sp Midcap
The main advantage of trading using opposite Nasdaq 100 and Sp Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Sp Midcap 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 Midcap will offset losses from the drop in Sp Midcap's long position.| Nasdaq 100 vs. Sp 500 2x | Nasdaq 100 vs. Inverse Nasdaq 100 2x | Nasdaq 100 vs. Inverse Sp 500 | Nasdaq 100 vs. Ultra Nasdaq 100 Profunds |
| Sp Midcap vs. Dreyfus Large Cap | Sp Midcap vs. Americafirst Large Cap | Sp Midcap vs. Siit Large Cap | Sp Midcap vs. Old Westbury Large |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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