Correlation Between GX Nasdaq-100 and One Choice

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Can any of the company-specific risk be diversified away by investing in both GX Nasdaq-100 and One Choice 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 GX Nasdaq-100 and One Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GX Nasdaq-100 Covered and One Choice Blend, you can compare the effects of market volatilities on GX Nasdaq-100 and One Choice 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 GX Nasdaq-100 with a short position of One Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of GX Nasdaq-100 and One Choice.

Diversification Opportunities for GX Nasdaq-100 and One Choice

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between GX Nasdaq-100 and AAAFX is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding GX Nasdaq-100 Covered and One Choice Blend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice Blend and GX 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 GX Nasdaq-100 Covered are associated (or correlated) with One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice Blend has no effect on the direction of GX Nasdaq-100 i.e., GX Nasdaq-100 and One Choice go up and down completely randomly.

Pair Corralation between GX Nasdaq-100 and One Choice

Given the investment horizon of 90 days GX Nasdaq-100 Covered is expected to under-perform the One Choice. In addition to that, GX Nasdaq-100 is 2.24 times more volatile than One Choice Blend. It trades about -0.13 of its total potential returns per unit of risk. One Choice Blend is currently generating about -0.14 per unit of volatility. If you would invest  955.00  in One Choice Blend on March 29, 2022 and sell it today you would lose (45.00)  from holding One Choice Blend or give up 4.71% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy97.62%
ValuesDaily Returns

GX Nasdaq-100 Covered  vs.  One Choice Blend

 Performance (%) 
      Timeline 
GX Nasdaq-100 Covered 
GX Nasdaq-100 Performance
0 of 100
Over the last 90 days GX Nasdaq-100 Covered has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's essential indicators remain rather sound which may send shares a bit higher in July 2022. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

GX Nasdaq-100 Price Channel

One Choice Blend 
AAAFX Performance
0 of 100
Over the last 90 days One Choice Blend has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest conflicting performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

AAAFX Price Channel

GX Nasdaq-100 and One Choice Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with GX Nasdaq-100 and One Choice

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

GX Nasdaq-100 Covered

Pair trading matchups for GX Nasdaq-100

Conagra Brands vs. GX Nasdaq-100
Home Depot vs. GX Nasdaq-100
Chevron Corp vs. GX Nasdaq-100
Teucrium Corn vs. GX Nasdaq-100
Cincinnati Financial vs. GX Nasdaq-100
Merck vs. GX Nasdaq-100
Northrop Grumman vs. GX Nasdaq-100
Verizon Communications vs. GX Nasdaq-100
Micron Technology vs. GX Nasdaq-100
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against GX Nasdaq-100 as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. GX Nasdaq-100's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, GX Nasdaq-100's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to GX Nasdaq-100 Covered.
The idea behind GX Nasdaq-100 Covered and One Choice Blend 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.

One Choice Blend

Pair trading matchups for One Choice

Check out your portfolio center. 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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