Correlation Between Europe 125x and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both Europe 125x and 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 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 Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Europe 125x and 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 Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europe 125x and Nasdaq 100.
Diversification Opportunities for Europe 125x and Nasdaq 100
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Europe and Nasdaq is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Europe 125x Strategy and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x 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 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 Nasdaq 100 2x has no effect on the direction of Europe 125x i.e., Europe 125x and Nasdaq 100 go up and down completely randomly.
Pair Corralation between Europe 125x and Nasdaq 100
Assuming the 90 days horizon Europe 125x is expected to generate 5.45 times less return on investment than Nasdaq 100. But when comparing it to its historical volatility, Europe 125x Strategy is 2.17 times less risky than Nasdaq 100. It trades about 0.05 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 19,030 in Nasdaq 100 2x Strategy on September 12, 2024 and sell it today you would earn a total of 41,790 from holding Nasdaq 100 2x Strategy or generate 219.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europe 125x Strategy vs. Nasdaq 100 2x Strategy
Performance |
| Timeline |
| Europe 125x Strategy |
| Nasdaq 100 2x |
Europe 125x and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europe 125x and Nasdaq 100
The main advantage of trading using opposite Europe 125x and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europe 125x position performs unexpectedly, 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 Nasdaq 100 will offset losses from the drop in Nasdaq 100's long position.| Europe 125x vs. Nasdaq 100 2x Strategy | Europe 125x vs. Nasdaq 100 2x Strategy | Europe 125x vs. Nasdaq 100 2x Strategy | Europe 125x vs. Ultra Nasdaq 100 Profunds |
| Nasdaq 100 vs. Sp 500 2x | Nasdaq 100 vs. Inverse Nasdaq 100 2x | Nasdaq 100 vs. Inverse Sp 500 | Nasdaq 100 vs. Ultra Nasdaq 100 Profunds |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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