Correlation Between Dow 2x and Nasdaq-100 Fund
Can any of the company-specific risk be diversified away by investing in both Dow 2x and Nasdaq-100 Fund 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 Dow 2x and Nasdaq-100 Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow 2x Strategy and Nasdaq 100 Fund Class, you can compare the effects of market volatilities on Dow 2x and Nasdaq-100 Fund 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 Dow 2x with a short position of Nasdaq-100 Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow 2x and Nasdaq-100 Fund.
Diversification Opportunities for Dow 2x and Nasdaq-100 Fund
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Nasdaq-100 is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Dow 2x Strategy and Nasdaq 100 Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Fund and Dow 2x 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 Dow 2x Strategy are associated (or correlated) with Nasdaq-100 Fund. 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 Fund has no effect on the direction of Dow 2x i.e., Dow 2x and Nasdaq-100 Fund go up and down completely randomly.
Pair Corralation between Dow 2x and Nasdaq-100 Fund
Assuming the 90 days horizon Dow 2x Strategy is expected to generate 1.24 times more return on investment than Nasdaq-100 Fund. However, Dow 2x is 1.24 times more volatile than Nasdaq 100 Fund Class. It trades about 0.1 of its potential returns per unit of risk. Nasdaq 100 Fund Class is currently generating about 0.09 per unit of risk. If you would invest 11,929 in Dow 2x Strategy on August 31, 2024 and sell it today you would earn a total of 7,530 from holding Dow 2x Strategy or generate 63.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Dow 2x Strategy vs. Nasdaq 100 Fund Class
Performance |
| Timeline |
| Dow 2x Strategy |
| Nasdaq 100 Fund |
Dow 2x and Nasdaq-100 Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dow 2x and Nasdaq-100 Fund
The main advantage of trading using opposite Dow 2x and Nasdaq-100 Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow 2x position performs unexpectedly, Nasdaq-100 Fund 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 Fund will offset losses from the drop in Nasdaq-100 Fund's long position.| Dow 2x vs. Dow 2x Strategy | Dow 2x vs. Dow 2x Strategy | Dow 2x vs. Nasdaq 100 2x Strategy | Dow 2x vs. Ultramid Cap Profund Ultramid Cap |
| Nasdaq-100 Fund vs. Nasdaq 100 Fund Class | Nasdaq-100 Fund vs. Nasdaq 100 Fund Class | Nasdaq-100 Fund vs. Nasdaq 100 Profund Nasdaq 100 | Nasdaq-100 Fund vs. Select Fund R |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |