Correlation Between Europe 125x and Strengthening Dollar
Can any of the company-specific risk be diversified away by investing in both Europe 125x 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 Europe 125x and Strengthening Dollar 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 Strengthening Dollar 2x, you can compare the effects of market volatilities on Europe 125x 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 Europe 125x with a short position of Strengthening Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europe 125x and Strengthening Dollar.
Diversification Opportunities for Europe 125x and Strengthening Dollar
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Europe and Strengthening is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Europe 125x Strategy and Strengthening Dollar 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strengthening Dollar 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 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 Europe 125x i.e., Europe 125x and Strengthening Dollar go up and down completely randomly.
Pair Corralation between Europe 125x and Strengthening Dollar
Assuming the 90 days horizon Europe 125x Strategy is expected to under-perform the Strengthening Dollar. In addition to that, Europe 125x is 1.04 times more volatile than Strengthening Dollar 2x. It trades about -0.36 of its total potential returns per unit of risk. Strengthening Dollar 2x is currently generating about 0.25 per unit of volatility. If you would invest 6,465 in Strengthening Dollar 2x on August 28, 2024 and sell it today you would earn a total of 350.00 from holding Strengthening Dollar 2x or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europe 125x Strategy vs. Strengthening Dollar 2x
Performance |
| Timeline |
| Europe 125x Strategy |
| Strengthening Dollar |
Europe 125x and Strengthening Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europe 125x and Strengthening Dollar
The main advantage of trading using opposite Europe 125x and Strengthening Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europe 125x 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.| Europe 125x vs. Sp 500 2x | Europe 125x vs. Inverse Dow 2x | Europe 125x vs. Nasdaq 100 2x Strategy | Europe 125x vs. Russell 2000 2x |
| Strengthening Dollar vs. Basic Materials Fund | Strengthening Dollar vs. Basic Materials Fund | Strengthening Dollar vs. Banking Fund Class | Strengthening Dollar 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |