Correlation Between Intermediate Term and Usaa Nasdaq

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

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

Diversification Opportunities for Intermediate Term and Usaa Nasdaq

-0.61

Correlation Coefficient

Intermediate Term  Usaa Nasdaq

Excellent diversification

The 3 months correlation between Intermediate and Usaa is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Term Bond Fund and Usaa Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usaa Nasdaq 100 and Intermediate Term 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 Intermediate Term Bond Fund are associated (or correlated) with Usaa Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usaa Nasdaq 100 has no effect on the direction of Intermediate Term i.e., Intermediate Term and Usaa Nasdaq go up and down completely randomly.

Pair Corralation between Intermediate Term and Usaa Nasdaq

Assuming the 90 days horizon Intermediate Term Bond Fund is expected to under-perform the Usaa Nasdaq. But the mutual fund apears to be less risky and, when comparing its historical volatility, Intermediate Term Bond Fund is 3.26 times less risky than Usaa Nasdaq. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Usaa Nasdaq 100 is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  4,902  in Usaa Nasdaq 100 on September 13, 2024 and sell it today you would earn a total of  569.00  from holding Usaa Nasdaq 100 or generate 11.61% return on investment over 90 days.

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

Intermediate Term Bond Fund  vs.  Usaa Nasdaq 100

Intermediate Term Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Intermediate Term and Usaa Nasdaq

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

The idea behind Intermediate Term Bond Fund and Usaa Nasdaq 100 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.