Correlation Between Banking Fund and Inverse Nasdaq
Can any of the company-specific risk be diversified away by investing in both Banking Fund 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 Banking Fund and Inverse Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banking Fund Class and Inverse Nasdaq 100 Strategy, you can compare the effects of market volatilities on Banking Fund 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 Banking Fund with a short position of Inverse Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banking Fund and Inverse Nasdaq.
Diversification Opportunities for Banking Fund and Inverse Nasdaq
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banking and Inverse is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Banking Fund Class 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 Banking 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 Banking Fund Class 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 Banking Fund i.e., Banking Fund and Inverse Nasdaq go up and down completely randomly.
Pair Corralation between Banking Fund and Inverse Nasdaq
Assuming the 90 days horizon Banking Fund Class is expected to generate 1.25 times more return on investment than Inverse Nasdaq. However, Banking Fund is 1.25 times more volatile than Inverse Nasdaq 100 Strategy. It trades about 0.12 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 7,677 in Banking Fund Class on September 3, 2024 and sell it today you would earn a total of 2,386 from holding Banking Fund Class or generate 31.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Banking Fund Class vs. Inverse Nasdaq 100 Strategy
Performance |
Timeline |
Banking Fund Class |
Inverse Nasdaq 100 |
Banking Fund and Inverse Nasdaq Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Banking Fund and Inverse Nasdaq
The main advantage of trading using opposite Banking Fund and Inverse Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banking Fund 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.Banking Fund vs. Goldman Sachs Growth | Banking Fund vs. Eip Growth And | Banking Fund vs. Smallcap Growth Fund | Banking Fund vs. Qs Growth Fund |
Inverse Nasdaq vs. L Abbett Growth | Inverse Nasdaq vs. Franklin Growth Opportunities | Inverse Nasdaq vs. Qs Growth Fund | Inverse Nasdaq vs. Qs Moderate 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data |