Correlation Between Forstrong Global and BetaPro NASDAQ

Can any of the company-specific risk be diversified away by investing in both Forstrong Global and BetaPro 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 Forstrong Global and BetaPro NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Forstrong Global Income and BetaPro NASDAQ 100 2x, you can compare the effects of market volatilities on Forstrong Global and BetaPro 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 Forstrong Global with a short position of BetaPro NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forstrong Global and BetaPro NASDAQ.

Diversification Opportunities for Forstrong Global and BetaPro NASDAQ

0.7

Correlation Coefficient

Forstrong Global  BetaPro NASDAQ

Poor diversification

The 3 months correlation between Forstrong and BetaPro is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income and BetaPro NASDAQ 100 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro NASDAQ 100 and Forstrong Global 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 Forstrong Global Income are associated (or correlated) with BetaPro NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro NASDAQ 100 has no effect on the direction of Forstrong Global i.e., Forstrong Global and BetaPro NASDAQ go up and down completely randomly.

Pair Corralation between Forstrong Global and BetaPro NASDAQ

Assuming the 90 days trading horizon Forstrong Global Income is expected to under-perform the BetaPro NASDAQ. But the etf apears to be less risky and, when comparing its historical volatility, Forstrong Global Income is 6.49 times less risky than BetaPro NASDAQ. The etf trades about -0.08 of its potential returns per unit of risk. The BetaPro NASDAQ 100 2x is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,278  in BetaPro NASDAQ 100 2x on August 31, 2024 and sell it today you would earn a total of  75.00  from holding BetaPro NASDAQ 100 2x or generate 3.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Forstrong Global Income  vs.  BetaPro NASDAQ 100 2x

Forstrong Global Income

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Forstrong Global Income are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Forstrong Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

BetaPro NASDAQ 100

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro NASDAQ 100 2x are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BetaPro NASDAQ displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forstrong Global and BetaPro NASDAQ

The main advantage of trading using opposite Forstrong Global and BetaPro NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global position performs unexpectedly, BetaPro 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 BetaPro NASDAQ will offset losses from the drop in BetaPro NASDAQ's long position.

The idea behind Forstrong Global Income and BetaPro NASDAQ 100 2x 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.