Correlation Between Inverse Nasdaq-100 and Sp 500
Can any of the company-specific risk be diversified away by investing in both Inverse Nasdaq-100 and Sp 500 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 Sp 500 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 Sp 500 2x, you can compare the effects of market volatilities on Inverse Nasdaq-100 and Sp 500 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 Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Nasdaq-100 and Sp 500.
Diversification Opportunities for Inverse Nasdaq-100 and Sp 500
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Inverse and RYCTX is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Nasdaq 100 Strategy and Sp 500 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 2x 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 Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 2x has no effect on the direction of Inverse Nasdaq-100 i.e., Inverse Nasdaq-100 and Sp 500 go up and down completely randomly.
Pair Corralation between Inverse Nasdaq-100 and Sp 500
Assuming the 90 days horizon Inverse Nasdaq 100 Strategy is expected to under-perform the Sp 500. But the mutual fund apears to be less risky and, when comparing its historical volatility, Inverse Nasdaq 100 Strategy is 1.43 times less risky than Sp 500. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Sp 500 2x is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 19,458 in Sp 500 2x on November 9, 2024 and sell it today you would earn a total of 8,164 from holding Sp 500 2x or generate 41.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Nasdaq 100 Strategy vs. Sp 500 2x
Performance |
| Timeline |
| Inverse Nasdaq 100 |
| Sp 500 2x |
Inverse Nasdaq-100 and Sp 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Nasdaq-100 and Sp 500
The main advantage of trading using opposite Inverse Nasdaq-100 and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Nasdaq-100 position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500's long position.| Inverse Nasdaq-100 vs. Alpine Ultra Short | Inverse Nasdaq-100 vs. Ab Municipal Bond | Inverse Nasdaq-100 vs. Fidelity California Municipal | Inverse Nasdaq-100 vs. Vanguard Telecommunication Services |
| Sp 500 vs. Ivy Natural Resources | Sp 500 vs. Clearbridge Energy Mlp | Sp 500 vs. Salient Mlp Energy | Sp 500 vs. Gamco Natural Resources |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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