Correlation Between Nasdaq 100 and Inverse Nasdaq
Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 and Inverse Nasdaq 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 Nasdaq 100 and Inverse Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Inverse Nasdaq 100 Strategy, you can compare the effects of market volatilities on Nasdaq 100 and Inverse Nasdaq 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 Nasdaq 100 with a short position of Inverse Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Inverse Nasdaq.
Diversification Opportunities for Nasdaq 100 and Inverse Nasdaq
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nasdaq and Inverse is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy 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 Nasdaq 100 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 Nasdaq 100 2x Strategy are associated (or correlated) with Inverse Nasdaq. 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 Nasdaq 100 i.e., Nasdaq 100 and Inverse Nasdaq go up and down completely randomly.
Pair Corralation between Nasdaq 100 and Inverse Nasdaq
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 2.15 times more return on investment than Inverse Nasdaq. However, Nasdaq 100 is 2.15 times more volatile than Inverse Nasdaq 100 Strategy. It trades about 0.07 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 50,426 in Nasdaq 100 2x Strategy on October 18, 2024 and sell it today you would earn a total of 5,581 from holding Nasdaq 100 2x Strategy or generate 11.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Inverse Nasdaq 100 Strategy
Performance |
| Timeline |
| Nasdaq 100 2x |
| Inverse Nasdaq 100 |
Nasdaq 100 and Inverse Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq 100 and Inverse Nasdaq
The main advantage of trading using opposite Nasdaq 100 and Inverse Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 position performs unexpectedly, Inverse Nasdaq 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 will offset losses from the drop in Inverse Nasdaq's long position.| 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 |
| Inverse Nasdaq vs. Rbb Fund | Inverse Nasdaq vs. Semiconductor Ultrasector Profund | Inverse Nasdaq vs. Arrow Managed Futures | Inverse Nasdaq vs. Eic Value 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |