Correlation Between Nasdaq-100 Index and Income Fund
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Index and Income Fund 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 Index and Income Fund 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 Income Fund Income, you can compare the effects of market volatilities on Nasdaq-100 Index and Income Fund 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 Index with a short position of Income Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Index and Income Fund.
Diversification Opportunities for Nasdaq-100 Index and Income Fund
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq-100 and Income is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Income Fund Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund Income and Nasdaq-100 Index 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 Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund Income has no effect on the direction of Nasdaq-100 Index i.e., Nasdaq-100 Index and Income Fund go up and down completely randomly.
Pair Corralation between Nasdaq-100 Index and Income Fund
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 3.11 times more return on investment than Income Fund. However, Nasdaq-100 Index is 3.11 times more volatile than Income Fund Income. It trades about 0.22 of its potential returns per unit of risk. Income Fund Income is currently generating about 0.17 per unit of risk. If you would invest 5,261 in Nasdaq 100 Index Fund on May 30, 2025 and sell it today you would earn a total of 556.00 from holding Nasdaq 100 Index Fund or generate 10.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Income Fund Income
Performance |
| Timeline |
| Nasdaq 100 Index |
| Income Fund Income |
Nasdaq-100 Index and Income Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100 Index and Income Fund
The main advantage of trading using opposite Nasdaq-100 Index and Income Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Index position performs unexpectedly, Income Fund 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 Income Fund will offset losses from the drop in Income Fund's long position.| Nasdaq-100 Index vs. Simt Real Estate | Nasdaq-100 Index vs. Rreef Property Trust | Nasdaq-100 Index vs. Vy Clarion Real | Nasdaq-100 Index vs. Amg Managers Centersquare |
| Income Fund vs. Capital Growth Fund | Income Fund vs. Emerging Markets Fund | Income Fund vs. High Income Fund | Income Fund vs. International Fund International |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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