Correlation Between Nasdaq-100 Fund and Inverse Sp
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Fund and Inverse Sp 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 Nasdaq-100 Fund and Inverse Sp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Fund Class and Inverse Sp 500, you can compare the effects of market volatilities on Nasdaq-100 Fund and Inverse Sp 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 Nasdaq-100 Fund with a short position of Inverse Sp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Fund and Inverse Sp.
Diversification Opportunities for Nasdaq-100 Fund and Inverse Sp
-0.98 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nasdaq-100 and Inverse is -0.98. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Fund Class and Inverse Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Sp 500 and Nasdaq-100 Fund 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 Nasdaq 100 Fund Class are associated (or correlated) with Inverse Sp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Sp 500 has no effect on the direction of Nasdaq-100 Fund i.e., Nasdaq-100 Fund and Inverse Sp go up and down completely randomly.
Pair Corralation between Nasdaq-100 Fund and Inverse Sp
Assuming the 90 days horizon Nasdaq 100 Fund Class is expected to generate 1.44 times more return on investment than Inverse Sp. However, Nasdaq-100 Fund is 1.44 times more volatile than Inverse Sp 500. It trades about 0.1 of its potential returns per unit of risk. Inverse Sp 500 is currently generating about -0.1 per unit of risk. If you would invest 6,002 in Nasdaq 100 Fund Class on September 2, 2024 and sell it today you would earn a total of 1,721 from holding Nasdaq 100 Fund Class or generate 28.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Fund Class vs. Inverse Sp 500
Performance |
| Timeline |
| Nasdaq 100 Fund |
| Inverse Sp 500 |
Nasdaq-100 Fund and Inverse Sp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100 Fund and Inverse Sp
The main advantage of trading using opposite Nasdaq-100 Fund and Inverse Sp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Fund position performs unexpectedly, Inverse Sp 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 Sp will offset losses from the drop in Inverse Sp's long position.| Nasdaq-100 Fund vs. Nasdaq 100 Fund Class | Nasdaq-100 Fund vs. Nasdaq 100 Fund Class | Nasdaq-100 Fund vs. Nasdaq 100 2x Strategy | Nasdaq-100 Fund vs. Dow 2x Strategy |
| Inverse Sp vs. Kinetics Small Cap | Inverse Sp vs. Fisher Small Cap | Inverse Sp vs. Ab Small Cap | Inverse Sp vs. Small Pany Growth |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |