Correlation Between Nasdaq-100 Profund and Oil Gas
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Profund and Oil Gas 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 Profund and Oil Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Profund Nasdaq 100 and Oil Gas Ultrasector, you can compare the effects of market volatilities on Nasdaq-100 Profund and Oil Gas 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 Profund with a short position of Oil Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Profund and Oil Gas.
Diversification Opportunities for Nasdaq-100 Profund and Oil Gas
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq-100 and Oil is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Profund Nasdaq 100 and Oil Gas Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Gas Ultrasector and Nasdaq-100 Profund 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 Profund Nasdaq 100 are associated (or correlated) with Oil Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Gas Ultrasector has no effect on the direction of Nasdaq-100 Profund i.e., Nasdaq-100 Profund and Oil Gas go up and down completely randomly.
Pair Corralation between Nasdaq-100 Profund and Oil Gas
Assuming the 90 days horizon Nasdaq-100 Profund is expected to generate 1.1 times less return on investment than Oil Gas. But when comparing it to its historical volatility, Nasdaq 100 Profund Nasdaq 100 is 1.44 times less risky than Oil Gas. It trades about 0.07 of its potential returns per unit of risk. Oil Gas Ultrasector is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,147 in Oil Gas Ultrasector on September 1, 2024 and sell it today you would earn a total of 573.00 from holding Oil Gas Ultrasector or generate 13.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Profund Nasdaq 100 vs. Oil Gas Ultrasector
Performance |
| Timeline |
| Nasdaq 100 Profund |
| Oil Gas Ultrasector |
Nasdaq-100 Profund and Oil Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100 Profund and Oil Gas
The main advantage of trading using opposite Nasdaq-100 Profund and Oil Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Profund position performs unexpectedly, Oil Gas 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 Oil Gas will offset losses from the drop in Oil Gas' long position.| Nasdaq-100 Profund vs. Short Real Estate | Nasdaq-100 Profund vs. Ultrashort Mid Cap Profund | Nasdaq-100 Profund vs. Technology Ultrasector Profund | Nasdaq-100 Profund vs. Technology Ultrasector Profund |
| Oil Gas vs. Precious Metals Ultrasector | Oil Gas vs. Real Estate Ultrasector | Oil Gas vs. Basic Materials Ultrasector | Oil Gas vs. Utilities Ultrasector Profund |
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 the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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