Correlation Between Europe 125x and Inverse Nasdaq-100
Can any of the company-specific risk be diversified away by investing in both Europe 125x and Inverse 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 Europe 125x and Inverse Nasdaq-100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europe 125x Strategy and Inverse Nasdaq 100 Strategy, you can compare the effects of market volatilities on Europe 125x and Inverse 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 Europe 125x with a short position of Inverse Nasdaq-100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europe 125x and Inverse Nasdaq-100.
Diversification Opportunities for Europe 125x and Inverse Nasdaq-100
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Europe and Inverse is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Europe 125x Strategy 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 Europe 125x 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 Europe 125x Strategy are associated (or correlated) with Inverse 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 Inverse Nasdaq 100 has no effect on the direction of Europe 125x i.e., Europe 125x and Inverse Nasdaq-100 go up and down completely randomly.
Pair Corralation between Europe 125x and Inverse Nasdaq-100
Assuming the 90 days horizon Europe 125x Strategy is expected to generate 0.82 times more return on investment than Inverse Nasdaq-100. However, Europe 125x Strategy is 1.22 times less risky than Inverse Nasdaq-100. It trades about 0.02 of its potential returns per unit of risk. Inverse Nasdaq 100 Strategy is currently generating about -0.06 per unit of risk. If you would invest 8,714 in Europe 125x Strategy on August 27, 2024 and sell it today you would earn a total of 249.00 from holding Europe 125x Strategy or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europe 125x Strategy vs. Inverse Nasdaq 100 Strategy
Performance |
| Timeline |
| Europe 125x Strategy |
| Inverse Nasdaq 100 |
Europe 125x and Inverse Nasdaq-100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europe 125x and Inverse Nasdaq-100
The main advantage of trading using opposite Europe 125x and Inverse Nasdaq-100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europe 125x position performs unexpectedly, Inverse 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 Inverse Nasdaq-100 will offset losses from the drop in Inverse Nasdaq-100's long position.| Europe 125x vs. Rational Special Situations | Europe 125x vs. Qs Global Equity | Europe 125x vs. Ab Value Fund | Europe 125x vs. Archer Balanced Fund |
| Inverse Nasdaq-100 vs. Basic Materials Fund | Inverse Nasdaq-100 vs. Basic Materials Fund | Inverse Nasdaq-100 vs. Banking Fund Class | Inverse Nasdaq-100 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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