Correlation Between Europe 125x and Inverse Government

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Europe 125x and Inverse Government 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 Government 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 Government Long, you can compare the effects of market volatilities on Europe 125x and Inverse Government 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 Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europe 125x and Inverse Government.

Diversification Opportunities for Europe 125x and Inverse Government

-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Europe and Inverse is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Europe 125x Strategy and Inverse Government Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Government Long 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 Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Government Long has no effect on the direction of Europe 125x i.e., Europe 125x and Inverse Government go up and down completely randomly.

Pair Corralation between Europe 125x and Inverse Government

Assuming the 90 days horizon Europe 125x Strategy is expected to under-perform the Inverse Government. In addition to that, Europe 125x is 1.15 times more volatile than Inverse Government Long. It trades about -0.3 of its total potential returns per unit of risk. Inverse Government Long is currently generating about 0.09 per unit of volatility. If you would invest  19,170  in Inverse Government Long on August 24, 2024 and sell it today you would earn a total of  334.00  from holding Inverse Government Long or generate 1.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

Europe 125x Strategy  vs.  Inverse Government Long

 Performance 
       Timeline  
Europe 125x Strategy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Europe 125x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the fund investors.
Inverse Government Long 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Inverse Government Long are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Inverse Government may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Europe 125x and Inverse Government Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Europe 125x and Inverse Government

The main advantage of trading using opposite Europe 125x and Inverse Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europe 125x position performs unexpectedly, Inverse Government 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 Government will offset losses from the drop in Inverse Government's long position.
The idea behind Europe 125x Strategy and Inverse Government Long 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.
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

Other Complementary Tools

Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
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
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume