Correlation Between BetaPro NASDAQ and Global Dividend

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

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

Diversification Opportunities for BetaPro NASDAQ and Global Dividend

-0.88

Correlation Coefficient

BetaPro NASDAQ  Global Dividend

Pay attention - limited upside

The 3 months correlation between BetaPro and Global is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro NASDAQ 100 2x and Global Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Dividend Growth and BetaPro 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 BetaPro NASDAQ 100 2x are associated (or correlated) with Global Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Dividend Growth has no effect on the direction of BetaPro NASDAQ i.e., BetaPro NASDAQ and Global Dividend go up and down completely randomly.

Pair Corralation between BetaPro NASDAQ and Global Dividend

Assuming the 90 days trading horizon BetaPro NASDAQ 100 2x is expected to under-perform the Global Dividend. In addition to that, BetaPro NASDAQ is 1.95 times more volatile than Global Dividend Growth. It trades about -0.17 of its total potential returns per unit of risk. Global Dividend Growth is currently generating about 0.25 per unit of volatility. If you would invest  1,029  in Global Dividend Growth on September 12, 2024 and sell it today you would earn a total of  169.00  from holding Global Dividend Growth or generate 16.42% return on investment over 90 days.

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

BetaPro NASDAQ 100 2x  vs.  Global Dividend Growth

BetaPro NASDAQ 100

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaPro NASDAQ 100 2x has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Global Dividend Growth

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Dividend Growth are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global Dividend displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BetaPro NASDAQ and Global Dividend

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

The idea behind BetaPro NASDAQ 100 2x and Global Dividend Growth 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.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.