Correlation Between Europe 125x and Inverse Sp
Can any of the company-specific risk be diversified away by investing in both Europe 125x and Inverse Sp 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 Sp 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 Sp 500, you can compare the effects of market volatilities on Europe 125x and Inverse Sp 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 Sp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europe 125x and Inverse Sp.
Diversification Opportunities for Europe 125x and Inverse Sp
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Europe and Inverse is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Europe 125x Strategy and Inverse Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Sp 500 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 Sp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Sp 500 has no effect on the direction of Europe 125x i.e., Europe 125x and Inverse Sp go up and down completely randomly.
Pair Corralation between Europe 125x and Inverse Sp
Assuming the 90 days horizon Europe 125x Strategy is expected to generate 1.2 times more return on investment than Inverse Sp. However, Europe 125x is 1.2 times more volatile than Inverse Sp 500. It trades about 0.02 of its potential returns per unit of risk. Inverse Sp 500 is currently generating about -0.1 per unit of risk. If you would invest 8,658 in Europe 125x Strategy on September 2, 2024 and sell it today you would earn a total of 367.00 from holding Europe 125x Strategy or generate 4.24% 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 Sp 500
Performance |
| Timeline |
| Europe 125x Strategy |
| Inverse Sp 500 |
Europe 125x and Inverse Sp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europe 125x and Inverse Sp
The main advantage of trading using opposite Europe 125x and Inverse Sp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europe 125x position performs unexpectedly, Inverse Sp 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 Sp will offset losses from the drop in Inverse Sp's long position.| Europe 125x vs. Dow 2x Strategy | Europe 125x vs. Dow 2x Strategy | Europe 125x vs. Nasdaq 100 2x Strategy | Europe 125x vs. Ultramid Cap Profund Ultramid Cap |
| Inverse Sp vs. The Gabelli Healthcare | Inverse Sp vs. Alger Health Sciences | Inverse Sp vs. Tekla Healthcare Opportunities | Inverse Sp vs. Delaware Healthcare 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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