Correlation Between Transportation Fund and Inverse Nasdaq-100
Can any of the company-specific risk be diversified away by investing in both Transportation Fund 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 Transportation Fund 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 Transportation Fund Class and Inverse Nasdaq 100 Strategy, you can compare the effects of market volatilities on Transportation Fund 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 Transportation Fund with a short position of Inverse Nasdaq-100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportation Fund and Inverse Nasdaq-100.
Diversification Opportunities for Transportation Fund and Inverse Nasdaq-100
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Transportation and Inverse is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Transportation Fund Class 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 Transportation Fund 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 Transportation Fund Class 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 Transportation Fund i.e., Transportation Fund and Inverse Nasdaq-100 go up and down completely randomly.
Pair Corralation between Transportation Fund and Inverse Nasdaq-100
Assuming the 90 days horizon Transportation Fund Class is expected to generate 1.0 times more return on investment than Inverse Nasdaq-100. However, Transportation Fund Class is 1.0 times less risky than Inverse Nasdaq-100. It trades about 0.04 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 4,212 in Transportation Fund Class on August 27, 2024 and sell it today you would earn a total of 415.00 from holding Transportation Fund Class or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transportation Fund Class vs. Inverse Nasdaq 100 Strategy
Performance |
| Timeline |
| Transportation Fund Class |
| Inverse Nasdaq 100 |
Transportation Fund and Inverse Nasdaq-100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportation Fund and Inverse Nasdaq-100
The main advantage of trading using opposite Transportation Fund and Inverse Nasdaq-100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportation Fund 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.| Transportation Fund vs. Barnes Group | Transportation Fund vs. Genpact Limited | Transportation Fund vs. Jacobs Solutions | Transportation Fund vs. Ryder System |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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