Correlation Between Nasdaq-100(r) and Ultranasdaq-100 Profund
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Ultranasdaq-100 Profund 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 Ultranasdaq-100 Profund 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 Ultranasdaq 100 Profund Ultranasdaq 100, you can compare the effects of market volatilities on Nasdaq-100(r) and Ultranasdaq-100 Profund 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 Ultranasdaq-100 Profund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Ultranasdaq-100 Profund.
Diversification Opportunities for Nasdaq-100(r) and Ultranasdaq-100 Profund
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nasdaq-100(r) and Ultranasdaq-100 is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Ultranasdaq 100 Profund Ultran in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultranasdaq 100 Profund 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 Ultranasdaq-100 Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultranasdaq 100 Profund has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Ultranasdaq-100 Profund go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Ultranasdaq-100 Profund
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 1.0 times more return on investment than Ultranasdaq-100 Profund. However, Nasdaq-100(r) is 1.0 times more volatile than Ultranasdaq 100 Profund Ultranasdaq 100. It trades about 0.09 of its potential returns per unit of risk. Ultranasdaq 100 Profund Ultranasdaq 100 is currently generating about 0.09 per unit of risk. If you would invest 38,566 in Nasdaq 100 2x Strategy on November 3, 2024 and sell it today you would earn a total of 1,507 from holding Nasdaq 100 2x Strategy or generate 3.91% 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. Ultranasdaq 100 Profund Ultran
Performance |
| Timeline |
| Nasdaq 100 2x |
| Ultranasdaq 100 Profund |
Nasdaq-100(r) and Ultranasdaq-100 Profund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Ultranasdaq-100 Profund
The main advantage of trading using opposite Nasdaq-100(r) and Ultranasdaq-100 Profund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Ultranasdaq-100 Profund 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 Ultranasdaq-100 Profund will offset losses from the drop in Ultranasdaq-100 Profund's long position.| Nasdaq-100(r) vs. Lsv Small Cap | Nasdaq-100(r) vs. Vanguard Small Cap Value | Nasdaq-100(r) vs. Mid Cap Growth Profund | Nasdaq-100(r) vs. Victory Rs Partners |
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 Stocks Directory module to find actively traded stocks across global markets.
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