Correlation Between Europe 125x and Inverse Nasdaq
Can any of the company-specific risk be diversified away by investing in both Europe 125x and Inverse Nasdaq 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 Europe 125x and Inverse Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europe 125x Strategy and Inverse Nasdaq 100 Strategy, you can compare the effects of market volatilities on Europe 125x and Inverse Nasdaq 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 Europe 125x with a short position of Inverse Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europe 125x and Inverse Nasdaq.
Diversification Opportunities for Europe 125x and Inverse Nasdaq
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Europe and Inverse is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Europe 125x Strategy and Inverse Nasdaq 100 Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Nasdaq 100 and Europe 125x 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 Europe 125x Strategy are associated (or correlated) with Inverse Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Nasdaq 100 has no effect on the direction of Europe 125x i.e., Europe 125x and Inverse Nasdaq go up and down completely randomly.
Pair Corralation between Europe 125x and Inverse Nasdaq
Assuming the 90 days horizon Europe 125x Strategy is expected to generate 0.89 times more return on investment than Inverse Nasdaq. However, Europe 125x Strategy is 1.12 times less risky than Inverse Nasdaq. It trades about -0.03 of its potential returns per unit of risk. Inverse Nasdaq 100 Strategy is currently generating about -0.05 per unit of risk. If you would invest 12,010 in Europe 125x Strategy on September 3, 2024 and sell it today you would lose (674.00) from holding Europe 125x Strategy or give up 5.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europe 125x Strategy vs. Inverse Nasdaq 100 Strategy
Performance |
| Timeline |
| Europe 125x Strategy |
| Inverse Nasdaq 100 |
Europe 125x and Inverse Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europe 125x and Inverse Nasdaq
The main advantage of trading using opposite Europe 125x and Inverse Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europe 125x position performs unexpectedly, Inverse Nasdaq 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 Inverse Nasdaq will offset losses from the drop in Inverse Nasdaq's long position.| Europe 125x vs. Blackrock Health Sciences | Europe 125x vs. Alger Health Sciences | Europe 125x vs. Invesco Global Health | Europe 125x vs. Blackrock Health Sciences |
| Inverse Nasdaq vs. Multisector Bond Sma | Inverse Nasdaq vs. Rationalpier 88 Convertible | Inverse Nasdaq vs. Limited Term Tax | Inverse Nasdaq vs. Ab Bond Inflation |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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