Correlation Between Inverse Nasdaq-100 and Rydex Inverse
Can any of the company-specific risk be diversified away by investing in both Inverse Nasdaq-100 and Rydex Inverse 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 Inverse Nasdaq-100 and Rydex Inverse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Nasdaq 100 Strategy and Rydex Inverse Nasdaq 100, you can compare the effects of market volatilities on Inverse Nasdaq-100 and Rydex Inverse 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 Inverse Nasdaq-100 with a short position of Rydex Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Nasdaq-100 and Rydex Inverse.
Diversification Opportunities for Inverse Nasdaq-100 and Rydex Inverse
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Inverse and Rydex is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Nasdaq 100 Strategy and Rydex Inverse Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rydex Inverse Nasdaq and Inverse 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 Inverse Nasdaq 100 Strategy are associated (or correlated) with Rydex Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rydex Inverse Nasdaq has no effect on the direction of Inverse Nasdaq-100 i.e., Inverse Nasdaq-100 and Rydex Inverse go up and down completely randomly.
Pair Corralation between Inverse Nasdaq-100 and Rydex Inverse
Assuming the 90 days horizon Inverse Nasdaq 100 Strategy is expected to generate 0.53 times more return on investment than Rydex Inverse. However, Inverse Nasdaq 100 Strategy is 1.9 times less risky than Rydex Inverse. It trades about -0.08 of its potential returns per unit of risk. Rydex Inverse Nasdaq 100 is currently generating about -0.09 per unit of risk. If you would invest 1,930 in Inverse Nasdaq 100 Strategy on September 2, 2024 and sell it today you would lose (753.00) from holding Inverse Nasdaq 100 Strategy or give up 39.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Nasdaq 100 Strategy vs. Rydex Inverse Nasdaq 100
Performance |
| Timeline |
| Inverse Nasdaq 100 |
| Rydex Inverse Nasdaq |
Inverse Nasdaq-100 and Rydex Inverse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Nasdaq-100 and Rydex Inverse
The main advantage of trading using opposite Inverse Nasdaq-100 and Rydex Inverse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Nasdaq-100 position performs unexpectedly, Rydex Inverse 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 Rydex Inverse will offset losses from the drop in Rydex Inverse's long position.| Inverse Nasdaq-100 vs. Victory Strategic Allocation | Inverse Nasdaq-100 vs. T Rowe Price | Inverse Nasdaq-100 vs. Alternative Asset Allocation | Inverse Nasdaq-100 vs. T Rowe Price |
| Rydex Inverse vs. Applied Finance Explorer | Rydex Inverse vs. Victory Rs Partners | Rydex Inverse vs. American Century Etf | Rydex Inverse vs. Mid Cap Value 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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