Correlation Between Inverse Nasdaq-100 and Energy Fund
Can any of the company-specific risk be diversified away by investing in both Inverse Nasdaq-100 and Energy Fund 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 Energy Fund 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 Energy Fund Class, you can compare the effects of market volatilities on Inverse Nasdaq-100 and Energy Fund 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 Energy Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Nasdaq-100 and Energy Fund.
Diversification Opportunities for Inverse Nasdaq-100 and Energy Fund
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between INVERSE and Energy is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Nasdaq 100 Strategy and Energy Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fund Class 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 Energy Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fund Class has no effect on the direction of Inverse Nasdaq-100 i.e., Inverse Nasdaq-100 and Energy Fund go up and down completely randomly.
Pair Corralation between Inverse Nasdaq-100 and Energy Fund
Assuming the 90 days horizon Inverse Nasdaq 100 Strategy is expected to under-perform the Energy Fund. In addition to that, Inverse Nasdaq-100 is 1.07 times more volatile than Energy Fund Class. It trades about -0.07 of its total potential returns per unit of risk. Energy Fund Class is currently generating about 0.36 per unit of volatility. If you would invest 23,121 in Energy Fund Class on August 27, 2024 and sell it today you would earn a total of 1,957 from holding Energy Fund Class or generate 8.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Nasdaq 100 Strategy vs. Energy Fund Class
Performance |
| Timeline |
| Inverse Nasdaq 100 |
| Energy Fund Class |
Inverse Nasdaq-100 and Energy Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Nasdaq-100 and Energy Fund
The main advantage of trading using opposite Inverse Nasdaq-100 and Energy Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Nasdaq-100 position performs unexpectedly, Energy Fund 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 Energy Fund will offset losses from the drop in Energy Fund's long position.| Inverse Nasdaq-100 vs. Basic Materials Fund | Inverse Nasdaq-100 vs. Basic Materials Fund | Inverse Nasdaq-100 vs. Banking Fund Class | Inverse Nasdaq-100 vs. Basic Materials Fund |
| Energy Fund vs. Energy Services Fund | Energy Fund vs. Basic Materials Fund | Energy Fund vs. Health Care Fund | Energy Fund vs. Precious Metals Fund |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |