Correlation Between Nasdaq-100(r) and Ultra Nasdaq-100
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Ultra Nasdaq-100 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(r) and Ultra Nasdaq-100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Ultra Nasdaq 100 Profunds, you can compare the effects of market volatilities on Nasdaq-100(r) and Ultra Nasdaq-100 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(r) with a short position of Ultra Nasdaq-100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Ultra Nasdaq-100.
Diversification Opportunities for Nasdaq-100(r) and Ultra Nasdaq-100
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq-100(r) and Ultra is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Ultra Nasdaq 100 Profunds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Nasdaq 100 and Nasdaq-100(r) 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 2x Strategy are associated (or correlated) with Ultra Nasdaq-100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Nasdaq 100 has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Ultra Nasdaq-100 go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Ultra Nasdaq-100
Assuming the 90 days horizon Nasdaq-100(r) is expected to generate 1.06 times less return on investment than Ultra Nasdaq-100. In addition to that, Nasdaq-100(r) is 1.0 times more volatile than Ultra Nasdaq 100 Profunds. It trades about 0.02 of its total potential returns per unit of risk. Ultra Nasdaq 100 Profunds is currently generating about 0.02 per unit of volatility. If you would invest 11,787 in Ultra Nasdaq 100 Profunds on November 4, 2024 and sell it today you would earn a total of 75.00 from holding Ultra Nasdaq 100 Profunds or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Ultra Nasdaq 100 Profunds
Performance |
| Timeline |
| Nasdaq 100 2x |
| Ultra Nasdaq 100 |
Nasdaq-100(r) and Ultra Nasdaq-100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Ultra Nasdaq-100
The main advantage of trading using opposite Nasdaq-100(r) and Ultra Nasdaq-100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Ultra Nasdaq-100 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 Ultra Nasdaq-100 will offset losses from the drop in Ultra Nasdaq-100's long position.| Nasdaq-100(r) vs. John Hancock Money | Nasdaq-100(r) vs. Financials Ultrasector Profund | Nasdaq-100(r) vs. Fidelity Advisor Financial | Nasdaq-100(r) vs. Hewitt Money Market |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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