Correlation Between Nasdaq-100(r) and Ultranasdaq 100

Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Ultranasdaq 100 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 Nasdaq-100(r) and Ultranasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Ultranasdaq 100 Profund Ultranasdaq 100, you can compare the effects of market volatilities on Nasdaq-100(r) and Ultranasdaq 100 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 Nasdaq-100(r) with a short position of Ultranasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Ultranasdaq 100.

Diversification Opportunities for Nasdaq-100(r) and Ultranasdaq 100

1.0

Correlation Coefficient

Nasdaq-100(r)  Ultranasdaq 100

No risk reduction

The 3 months correlation between Nasdaq-100(r) and Ultranasdaq is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Ultranasdaq 100 Profund Ultran in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultranasdaq 100 Profund and Nasdaq-100(r) 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 Nasdaq 100 2x Strategy are associated (or correlated) with Ultranasdaq 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultranasdaq 100 Profund has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Ultranasdaq 100 go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Ultranasdaq 100

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 1.0 times more return on investment than Ultranasdaq 100. However, Nasdaq-100(r) is 1.0 times more volatile than Ultranasdaq 100 Profund Ultranasdaq 100. It trades about 0.13 of its potential returns per unit of risk. Ultranasdaq 100 Profund Ultranasdaq 100 is currently generating about 0.13 per unit of risk. If you would invest  48,630  in Nasdaq 100 2x Strategy on August 31, 2024 and sell it today you would earn a total of  8,420  from holding Nasdaq 100 2x Strategy or generate 17.31% return on investment over 90 days.

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

Nasdaq 100 2x Strategy  vs.  Ultranasdaq 100 Profund Ultran

Nasdaq 100 2x

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nasdaq-100(r) showed solid returns over the last few months and may actually be approaching a breakup point.

Ultranasdaq 100 Profund

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ultranasdaq 100 Profund Ultranasdaq 100 are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ultranasdaq 100 showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq-100(r) and Ultranasdaq 100

The main advantage of trading using opposite Nasdaq-100(r) and Ultranasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Ultranasdaq 100 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 Ultranasdaq 100 will offset losses from the drop in Ultranasdaq 100's long position.

The idea behind Nasdaq 100 2x Strategy and Ultranasdaq 100 Profund Ultranasdaq 100 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.