Correlation Between Inverse Nasdaq-100 and Banking Fund
Can any of the company-specific risk be diversified away by investing in both Inverse Nasdaq-100 and Banking 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 Banking 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 Banking Fund Class, you can compare the effects of market volatilities on Inverse Nasdaq-100 and Banking 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 Banking Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Nasdaq-100 and Banking Fund.
Diversification Opportunities for Inverse Nasdaq-100 and Banking Fund
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INVERSE and Banking is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Nasdaq 100 Strategy and Banking Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banking 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 Banking Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banking Fund Class has no effect on the direction of Inverse Nasdaq-100 i.e., Inverse Nasdaq-100 and Banking Fund go up and down completely randomly.
Pair Corralation between Inverse Nasdaq-100 and Banking Fund
Assuming the 90 days horizon Inverse Nasdaq 100 Strategy is expected to under-perform the Banking Fund. In addition to that, Inverse Nasdaq-100 is 1.11 times more volatile than Banking Fund Class. It trades about -0.08 of its total potential returns per unit of risk. Banking Fund Class is currently generating about 0.35 per unit of volatility. If you would invest 7,416 in Banking Fund Class on November 2, 2024 and sell it today you would earn a total of 613.00 from holding Banking Fund Class or generate 8.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Nasdaq 100 Strategy vs. Banking Fund Class
Performance |
| Timeline |
| Inverse Nasdaq 100 |
| Banking Fund Class |
Inverse Nasdaq-100 and Banking Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Nasdaq-100 and Banking Fund
The main advantage of trading using opposite Inverse Nasdaq-100 and Banking Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Nasdaq-100 position performs unexpectedly, Banking 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 Banking Fund will offset losses from the drop in Banking Fund's long position.| Inverse Nasdaq-100 vs. Schwab Government Money | Inverse Nasdaq-100 vs. Ab Government Exchange | Inverse Nasdaq-100 vs. Putnam Money Market | Inverse Nasdaq-100 vs. Prudential Government Money |
| Banking Fund vs. Basic Materials Fund | Banking Fund vs. Basic Materials Fund | Banking Fund vs. Banking Fund Class | Banking Fund vs. Basic Materials 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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