Correlation Between Usaa Nasdaq and Tax Exempt

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

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

Diversification Opportunities for Usaa Nasdaq and Tax Exempt

0.2

Correlation Coefficient

Usaa Nasdaq  Tax Exempt

Modest diversification

The 3 months correlation between Usaa and Tax is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Usaa Nasdaq 100 and Tax Exempt Long Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Exempt Long and Usaa Nasdaq 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 Usaa Nasdaq 100 are associated (or correlated) with Tax Exempt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Exempt Long has no effect on the direction of Usaa Nasdaq i.e., Usaa Nasdaq and Tax Exempt go up and down completely randomly.

Pair Corralation between Usaa Nasdaq and Tax Exempt

Assuming the 90 days horizon Usaa Nasdaq 100 is expected to generate 2.79 times more return on investment than Tax Exempt. However, Usaa Nasdaq is 2.79 times more volatile than Tax Exempt Long Term. It trades about 0.18 of its potential returns per unit of risk. Tax Exempt Long Term is currently generating about -0.01 per unit of risk. If you would invest  4,879  in Usaa Nasdaq 100 on September 15, 2024 and sell it today you would earn a total of  555.00  from holding Usaa Nasdaq 100 or generate 11.38% return on investment over 90 days.

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

Usaa Nasdaq 100  vs.  Tax Exempt Long Term

Usaa Nasdaq 100

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Usaa Nasdaq 100 are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Usaa Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tax Exempt Long

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tax Exempt Long Term has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Tax Exempt is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Usaa Nasdaq and Tax Exempt

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

The idea behind Usaa Nasdaq 100 and Tax Exempt Long Term 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.