Correlation Between Nasdaq-100(r) and Multi-index 2010

Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Multi-index 2010 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(r) and Multi-index 2010 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 Multi Index 2010 Lifetime, you can compare the effects of market volatilities on Nasdaq-100(r) and Multi-index 2010 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(r) with a short position of Multi-index 2010. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Multi-index 2010.

Diversification Opportunities for Nasdaq-100(r) and Multi-index 2010

0.96

Correlation Coefficient

Nasdaq-100(r)  Multi-index 2010

Almost no diversification

The 3 months correlation between Nasdaq-100(r) and Multi-index is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Multi Index 2010 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2010 and Nasdaq-100(r) 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 Multi-index 2010. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2010 has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Multi-index 2010 go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Multi-index 2010

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 7.03 times more return on investment than Multi-index 2010. However, Nasdaq-100(r) is 7.03 times more volatile than Multi Index 2010 Lifetime. It trades about 0.32 of its potential returns per unit of risk. Multi Index 2010 Lifetime is currently generating about 0.28 per unit of risk. If you would invest  31,231  in Nasdaq 100 2x Strategy on April 25, 2025 and sell it today you would earn a total of  12,505  from holding Nasdaq 100 2x Strategy or generate 40.04% 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.  Multi Index 2010 Lifetime

Nasdaq 100 2x

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Nasdaq-100(r) showed solid returns over the last few months and may actually be approaching a breakup point.

Multi Index 2010

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Index 2010 Lifetime are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Multi-index 2010 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq-100(r) and Multi-index 2010

The main advantage of trading using opposite Nasdaq-100(r) and Multi-index 2010 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Multi-index 2010 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 Multi-index 2010 will offset losses from the drop in Multi-index 2010's long position.

The idea behind Nasdaq 100 2x Strategy and Multi Index 2010 Lifetime 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.

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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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.