Correlation Between Ultra Nasdaq-100 and Oil Gas
Can any of the company-specific risk be diversified away by investing in both Ultra Nasdaq-100 and Oil Gas 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 Oil Gas 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 Oil Gas Ultrasector, you can compare the effects of market volatilities on Ultra Nasdaq-100 and Oil Gas 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 Oil Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Nasdaq-100 and Oil Gas.
Diversification Opportunities for Ultra Nasdaq-100 and Oil Gas
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ultra and Oil is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Nasdaq 100 Profunds and Oil Gas Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Gas Ultrasector 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 Oil Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Gas Ultrasector has no effect on the direction of Ultra Nasdaq-100 i.e., Ultra Nasdaq-100 and Oil Gas go up and down completely randomly.
Pair Corralation between Ultra Nasdaq-100 and Oil Gas
Assuming the 90 days horizon Ultra Nasdaq 100 Profunds is expected to generate 1.22 times more return on investment than Oil Gas. However, Ultra Nasdaq-100 is 1.22 times more volatile than Oil Gas Ultrasector. It trades about 0.08 of its potential returns per unit of risk. Oil Gas Ultrasector is currently generating about 0.08 per unit of risk. If you would invest 10,203 in Ultra Nasdaq 100 Profunds on August 24, 2024 and sell it today you would earn a total of 1,068 from holding Ultra Nasdaq 100 Profunds or generate 10.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Ultra Nasdaq 100 Profunds vs. Oil Gas Ultrasector
Performance |
| Timeline |
| Ultra Nasdaq 100 |
| Oil Gas Ultrasector |
Ultra Nasdaq-100 and Oil Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Nasdaq-100 and Oil Gas
The main advantage of trading using opposite Ultra Nasdaq-100 and Oil Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Nasdaq-100 position performs unexpectedly, Oil Gas 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 Oil Gas will offset losses from the drop in Oil Gas' long position.The idea behind Ultra Nasdaq 100 Profunds and Oil Gas Ultrasector 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.
| Oil Gas vs. Oil Gas Ultrasector | Oil Gas vs. Ultramid Cap Profund Ultramid Cap | Oil Gas vs. Precious Metals Ultrasector | Oil Gas vs. Real Estate Ultrasector |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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