Correlation Between BetaPro NASDAQ and Dynamic Active

Can any of the company-specific risk be diversified away by investing in both BetaPro NASDAQ and Dynamic Active 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 Dynamic Active 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 Dynamic Active Global, you can compare the effects of market volatilities on BetaPro NASDAQ and Dynamic Active 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 Dynamic Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro NASDAQ and Dynamic Active.

Diversification Opportunities for BetaPro NASDAQ and Dynamic Active

-0.85

Correlation Coefficient

BetaPro NASDAQ  Dynamic Active

Pay attention - limited upside

The 3 months correlation between BetaPro and Dynamic is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro NASDAQ 100 2x and Dynamic Active Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Active Global 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 Dynamic Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Active Global has no effect on the direction of BetaPro NASDAQ i.e., BetaPro NASDAQ and Dynamic Active go up and down completely randomly.

Pair Corralation between BetaPro NASDAQ and Dynamic Active

Assuming the 90 days trading horizon BetaPro NASDAQ 100 2x is expected to under-perform the Dynamic Active. In addition to that, BetaPro NASDAQ is 3.06 times more volatile than Dynamic Active Global. It trades about -0.07 of its total potential returns per unit of risk. Dynamic Active Global is currently generating about 0.18 per unit of volatility. If you would invest  2,959  in Dynamic Active Global on September 1, 2024 and sell it today you would earn a total of  1,757  from holding Dynamic Active Global or generate 59.38% 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.  Dynamic Active Global

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 December 2024. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Dynamic Active Global

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dynamic Active Global are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Dynamic Active may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with BetaPro NASDAQ and Dynamic Active

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

The idea behind BetaPro NASDAQ 100 2x and Dynamic Active Global 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.