Correlation Between Nasdaq-100(r) and Ultra Nasdaq
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Ultra 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(r) and Ultra 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 Ultra Nasdaq 100 Profunds, you can compare the effects of market volatilities on Nasdaq-100(r) and Ultra 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(r) with a short position of Ultra Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Ultra Nasdaq.
Diversification Opportunities for Nasdaq-100(r) and Ultra Nasdaq
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Nasdaq-100(r) and Ultra is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Ultra Nasdaq 100 Profunds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Nasdaq 100 and Nasdaq-100(r) 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 Ultra Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Nasdaq 100 has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Ultra Nasdaq go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Ultra Nasdaq
Assuming the 90 days horizon Nasdaq-100(r) is expected to generate 1.0 times less return on investment than Ultra Nasdaq. In addition to that, Nasdaq-100(r) is 1.0 times more volatile than Ultra Nasdaq 100 Profunds. It trades about 0.07 of its total potential returns per unit of risk. Ultra Nasdaq 100 Profunds is currently generating about 0.07 per unit of volatility. If you would invest 10,952 in Ultra Nasdaq 100 Profunds on August 31, 2024 and sell it today you would earn a total of 311.00 from holding Ultra Nasdaq 100 Profunds or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Ultra Nasdaq 100 Profunds
Performance |
| Timeline |
| Nasdaq 100 2x |
| Ultra Nasdaq 100 |
Nasdaq-100(r) and Ultra Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Ultra Nasdaq
The main advantage of trading using opposite Nasdaq-100(r) and Ultra Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Ultra 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 Ultra Nasdaq will offset losses from the drop in Ultra Nasdaq's long position.| Nasdaq-100(r) vs. Sp 500 2x | Nasdaq-100(r) vs. Inverse Nasdaq 100 2x | Nasdaq-100(r) vs. Inverse Sp 500 | Nasdaq-100(r) vs. Ultra Nasdaq 100 Profunds |
| Ultra Nasdaq vs. Nasdaq 100 2x Strategy | Ultra Nasdaq vs. Nasdaq 100 2x Strategy | Ultra Nasdaq vs. Nasdaq 100 2x Strategy | Ultra Nasdaq vs. Monthly Rebalance Nasdaq 100 |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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