Correlation Between Nasdaq-100 Profund and Real Estate

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

By analyzing existing cross correlation between Nasdaq 100 Profund Nasdaq 100 and Real Estate Ultrasector, you can compare the effects of market volatilities on Nasdaq-100 Profund and Real Estate 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 Profund with a short position of Real Estate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Profund and Real Estate.

Diversification Opportunities for Nasdaq-100 Profund and Real Estate

-0.07

Correlation Coefficient

Nasdaq-100 Profund  Real Estate

Good diversification

The 3 months correlation between Nasdaq-100 and Real is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Profund Nasdaq 100 and Real Estate Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Ultrasector and Nasdaq-100 Profund 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 Profund Nasdaq 100 are associated (or correlated) with Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Ultrasector has no effect on the direction of Nasdaq-100 Profund i.e., Nasdaq-100 Profund and Real Estate go up and down completely randomly.

Pair Corralation between Nasdaq-100 Profund and Real Estate

Assuming the 90 days horizon Nasdaq 100 Profund Nasdaq 100 is expected to under-perform the Real Estate. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nasdaq 100 Profund Nasdaq 100 is 1.29 times less risky than Real Estate. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Real Estate Ultrasector is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4,539  in Real Estate Ultrasector on December 3, 2024 and sell it today you would lose (125.00) from holding Real Estate Ultrasector or give up 2.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Nasdaq 100 Profund Nasdaq 100  vs.  Real Estate Ultrasector

Nasdaq 100 Profund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq 100 Profund Nasdaq 100 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Nasdaq-100 Profund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Real Estate Ultrasector

Risk-Adjusted Performance

Very Weak

Over the last 90 days Real Estate Ultrasector has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Real Estate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq-100 Profund and Real Estate

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

The idea behind Nasdaq 100 Profund Nasdaq 100 and Real Estate Ultrasector 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.