Correlation Between Nasdaq 100 and Gmo E

Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Gmo E 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 Gmo E 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 Gmo E Plus, you can compare the effects of market volatilities on Nasdaq 100 and Gmo E 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 Gmo E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Gmo E.

Diversification Opportunities for Nasdaq 100 and Gmo E

0.68

Correlation Coefficient

Nasdaq 100  Gmo E

Poor diversification

The 3 months correlation between Nasdaq and Gmo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Gmo E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo E Plus 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 Index Fund are associated (or correlated) with Gmo E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo E Plus has no effect on the direction of Nasdaq 100 i.e., Nasdaq 100 and Gmo E go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Gmo E

Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 3.19 times more return on investment than Gmo E. However, Nasdaq 100 is 3.19 times more volatile than Gmo E Plus. It trades about 0.27 of its potential returns per unit of risk. Gmo E Plus is currently generating about 0.14 per unit of risk. If you would invest  4,919  in Nasdaq 100 Index Fund on May 5, 2025 and sell it today you would earn a total of  810.00  from holding Nasdaq 100 Index Fund or generate 16.47% 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.  Gmo E Plus

Nasdaq 100 Index

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 Index Fund are ranked lower than 21 (%) 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.

Gmo E Plus

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo E Plus are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gmo E 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 and Gmo E

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

The idea behind Nasdaq 100 Index Fund and Gmo E Plus 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.