Correlation Between Rydex Inverse and Strengthening Dollar
Can any of the company-specific risk be diversified away by investing in both Rydex Inverse and Strengthening Dollar 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 Rydex Inverse and Strengthening Dollar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rydex Inverse Nasdaq 100 and Strengthening Dollar 2x, you can compare the effects of market volatilities on Rydex Inverse and Strengthening Dollar 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 Rydex Inverse with a short position of Strengthening Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rydex Inverse and Strengthening Dollar.
Diversification Opportunities for Rydex Inverse and Strengthening Dollar
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rydex and Strengthening is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Rydex Inverse Nasdaq 100 and Strengthening Dollar 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strengthening Dollar and Rydex Inverse 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 Rydex Inverse Nasdaq 100 are associated (or correlated) with Strengthening Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strengthening Dollar has no effect on the direction of Rydex Inverse i.e., Rydex Inverse and Strengthening Dollar go up and down completely randomly.
Pair Corralation between Rydex Inverse and Strengthening Dollar
Assuming the 90 days horizon Rydex Inverse Nasdaq 100 is expected to under-perform the Strengthening Dollar. In addition to that, Rydex Inverse is 2.09 times more volatile than Strengthening Dollar 2x. It trades about -0.06 of its total potential returns per unit of risk. Strengthening Dollar 2x is currently generating about 0.18 per unit of volatility. If you would invest 6,441 in Strengthening Dollar 2x on August 31, 2024 and sell it today you would earn a total of 269.00 from holding Strengthening Dollar 2x or generate 4.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rydex Inverse Nasdaq 100 vs. Strengthening Dollar 2x
Performance |
| Timeline |
| Rydex Inverse Nasdaq |
| Strengthening Dollar |
Rydex Inverse and Strengthening Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rydex Inverse and Strengthening Dollar
The main advantage of trading using opposite Rydex Inverse and Strengthening Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rydex Inverse position performs unexpectedly, Strengthening Dollar 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 Strengthening Dollar will offset losses from the drop in Strengthening Dollar's long position.| Rydex Inverse vs. Precious Metals And | Rydex Inverse vs. International Investors Gold | Rydex Inverse vs. Gamco Global Gold | Rydex Inverse vs. Great West Goldman Sachs |
| Strengthening Dollar vs. Rising Dollar Profund | Strengthening Dollar vs. Strengthening Dollar 2x | Strengthening Dollar vs. Strengthening Dollar 2x | Strengthening Dollar vs. Short Real Estate |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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