Correlation Between Commodities Strategy and Nasdaq 100

Can any of the company-specific risk be diversified away by investing in both Commodities Strategy and Nasdaq 100 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 Commodities Strategy and Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Commodities Strategy Fund and Nasdaq 100 Fund Class, you can compare the effects of market volatilities on Commodities Strategy and Nasdaq 100 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 Commodities Strategy with a short position of Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and Nasdaq 100.

Diversification Opportunities for Commodities Strategy and Nasdaq 100

0.75

Correlation Coefficient

Commodities Strategy  Nasdaq 100

Poor diversification

The 3 months correlation between Commodities and Nasdaq is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund and Nasdaq 100 Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Fund and Commodities Strategy 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 Commodities Strategy Fund are associated (or correlated) with Nasdaq 100. 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 Fund has no effect on the direction of Commodities Strategy i.e., Commodities Strategy and Nasdaq 100 go up and down completely randomly.

Pair Corralation between Commodities Strategy and Nasdaq 100

Assuming the 90 days horizon Commodities Strategy is expected to generate 1.99 times less return on investment than Nasdaq 100. In addition to that, Commodities Strategy is 1.25 times more volatile than Nasdaq 100 Fund Class. It trades about 0.12 of its total potential returns per unit of risk. Nasdaq 100 Fund Class is currently generating about 0.29 per unit of volatility. If you would invest  6,856  in Nasdaq 100 Fund Class on May 4, 2025 and sell it today you would earn a total of  1,146  from holding Nasdaq 100 Fund Class or generate 16.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Commodities Strategy Fund  vs.  Nasdaq 100 Fund Class

Commodities Strategy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Commodities Strategy Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking indicators, Commodities Strategy may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Nasdaq 100 Fund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 Fund Class are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nasdaq 100 showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commodities Strategy and Nasdaq 100

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

The idea behind Commodities Strategy Fund and Nasdaq 100 Fund Class 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.