Correlation Between Ultra Nasdaq and Oil Equipment
Can any of the company-specific risk be diversified away by investing in both Ultra Nasdaq and Oil Equipment 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 and Oil Equipment 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 Equipment Services, you can compare the effects of market volatilities on Ultra Nasdaq and Oil Equipment 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 with a short position of Oil Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Nasdaq and Oil Equipment.
Diversification Opportunities for Ultra Nasdaq and Oil Equipment
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ultra and Oil is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Nasdaq 100 Profunds and Oil Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Equipment Services and Ultra Nasdaq 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 Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Equipment Services has no effect on the direction of Ultra Nasdaq i.e., Ultra Nasdaq and Oil Equipment go up and down completely randomly.
Pair Corralation between Ultra Nasdaq and Oil Equipment
Assuming the 90 days horizon Ultra Nasdaq 100 Profunds is expected to generate 0.79 times more return on investment than Oil Equipment. However, Ultra Nasdaq 100 Profunds is 1.27 times less risky than Oil Equipment. It trades about 0.09 of its potential returns per unit of risk. Oil Equipment Services is currently generating about -0.02 per unit of risk. If you would invest 6,569 in Ultra Nasdaq 100 Profunds on September 12, 2024 and sell it today you would earn a total of 5,351 from holding Ultra Nasdaq 100 Profunds or generate 81.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Nasdaq 100 Profunds vs. Oil Equipment Services
Performance |
| Timeline |
| Ultra Nasdaq 100 |
| Oil Equipment Services |
Ultra Nasdaq and Oil Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Nasdaq and Oil Equipment
The main advantage of trading using opposite Ultra Nasdaq and Oil Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Nasdaq position performs unexpectedly, Oil Equipment 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 Equipment will offset losses from the drop in Oil Equipment's long position.| Ultra Nasdaq vs. Ultrabull Profund Investor | Ultra Nasdaq vs. Profunds Ultrashort Nasdaq 100 | Ultra Nasdaq vs. Ultrasmall Cap Profund Ultrasmall Cap | Ultra Nasdaq vs. Ultramid Cap Profund Ultramid Cap |
| Oil Equipment vs. Nasdaq 100 2x Strategy | Oil Equipment vs. Nasdaq 100 2x Strategy | Oil Equipment vs. Nasdaq 100 2x Strategy | Oil Equipment vs. Ultra Nasdaq 100 Profunds |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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