Correlation Between Ultra Nasdaq-100 and American Funds
Can any of the company-specific risk be diversified away by investing in both Ultra Nasdaq-100 and American Funds 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 Ultra Nasdaq-100 and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Nasdaq 100 Profunds and American Funds International, you can compare the effects of market volatilities on Ultra Nasdaq-100 and American Funds 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 Ultra Nasdaq-100 with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Nasdaq-100 and American Funds.
Diversification Opportunities for Ultra Nasdaq-100 and American Funds
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ultra and American is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Nasdaq 100 Profunds and American Funds International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Inter and Ultra 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 Ultra Nasdaq 100 Profunds are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Inter has no effect on the direction of Ultra Nasdaq-100 i.e., Ultra Nasdaq-100 and American Funds go up and down completely randomly.
Pair Corralation between Ultra Nasdaq-100 and American Funds
Assuming the 90 days horizon Ultra Nasdaq 100 Profunds is expected to generate 3.58 times more return on investment than American Funds. However, Ultra Nasdaq-100 is 3.58 times more volatile than American Funds International. It trades about 0.02 of its potential returns per unit of risk. American Funds International is currently generating about -0.37 per unit of risk. If you would invest 12,004 in Ultra Nasdaq 100 Profunds on October 9, 2024 and sell it today you would earn a total of 38.00 from holding Ultra Nasdaq 100 Profunds or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Nasdaq 100 Profunds vs. American Funds International
Performance |
| Timeline |
| Ultra Nasdaq 100 |
| American Funds Inter |
Ultra Nasdaq-100 and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Nasdaq-100 and American Funds
The main advantage of trading using opposite Ultra Nasdaq-100 and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Nasdaq-100 position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.The idea behind Ultra Nasdaq 100 Profunds and American Funds International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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