Correlation Between Rough Rice and Nasdaq 100

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

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

Diversification Opportunities for Rough Rice and Nasdaq 100

-0.32

Correlation Coefficient

Rough Rice  Nasdaq 100

Very good diversification

The 3 months correlation between Rough and Nasdaq is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Rough Rice Futures and Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 and Rough Rice 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 Rough Rice Futures 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 has no effect on the direction of Rough Rice i.e., Rough Rice and Nasdaq 100 go up and down completely randomly.

Pair Corralation between Rough Rice and Nasdaq 100

Assuming the 90 days horizon Rough Rice is expected to generate 15.5 times less return on investment than Nasdaq 100. In addition to that, Rough Rice is 2.0 times more volatile than Nasdaq 100. It trades about 0.0 of its total potential returns per unit of risk. Nasdaq 100 is currently generating about 0.11 per unit of volatility. If you would invest  1,171,175  in Nasdaq 100 on September 2, 2024 and sell it today you would earn a total of  928,175  from holding Nasdaq 100 or generate 79.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.61%
Values	Daily Returns

Rough Rice Futures  vs.  Nasdaq 100

Rough Rice Futures

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rough Rice Futures are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Rough Rice is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nasdaq 100

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Nasdaq 100 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rough Rice and Nasdaq 100

The main advantage of trading using opposite Rough Rice and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rough Rice 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 Rough Rice Futures and 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.