Correlation Between Banking Fund and Rydex Inverse
Can any of the company-specific risk be diversified away by investing in both Banking Fund and Rydex Inverse 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 Rydex Inverse 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 Rydex Inverse Nasdaq 100, you can compare the effects of market volatilities on Banking Fund and Rydex Inverse 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 Rydex Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banking Fund and Rydex Inverse.
Diversification Opportunities for Banking Fund and Rydex Inverse
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Banking and Rydex is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Banking Fund Class and Rydex Inverse Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rydex Inverse Nasdaq 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 Rydex Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rydex Inverse Nasdaq has no effect on the direction of Banking Fund i.e., Banking Fund and Rydex Inverse go up and down completely randomly.
Pair Corralation between Banking Fund and Rydex Inverse
Assuming the 90 days horizon Banking Fund Class is expected to generate 0.67 times more return on investment than Rydex Inverse. However, Banking Fund Class is 1.49 times less risky than Rydex Inverse. It trades about -0.17 of its potential returns per unit of risk. Rydex Inverse Nasdaq 100 is currently generating about -0.16 per unit of risk. If you would invest 9,820 in Banking Fund Class on September 14, 2024 and sell it today you would lose (450.00) from holding Banking Fund Class or give up 4.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banking Fund Class vs. Rydex Inverse Nasdaq 100
Performance |
| Timeline |
| Banking Fund Class |
| Rydex Inverse Nasdaq |
Banking Fund and Rydex Inverse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banking Fund and Rydex Inverse
The main advantage of trading using opposite Banking Fund and Rydex Inverse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banking Fund position performs unexpectedly, Rydex Inverse 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 Rydex Inverse will offset losses from the drop in Rydex Inverse's long position.| Banking Fund vs. Short Precious Metals | Banking Fund vs. James Balanced Golden | Banking Fund vs. International Investors Gold | Banking Fund vs. Gabelli Gold Fund |
| Rydex Inverse vs. Basic Materials Fund | Rydex Inverse vs. Basic Materials Fund | Rydex Inverse vs. Banking Fund Class | Rydex Inverse 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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