Correlation Between Purpose Multi and BetaPro NASDAQ

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

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

Diversification Opportunities for Purpose Multi and BetaPro NASDAQ

-0.92

Correlation Coefficient

Purpose Multi  BetaPro NASDAQ

Pay attention - limited upside

The 3 months correlation between Purpose and BetaPro is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Purpose Multi Strategy Market 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 Purpose Multi 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 Purpose Multi Strategy Market 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 Purpose Multi i.e., Purpose Multi and BetaPro NASDAQ go up and down completely randomly.

Pair Corralation between Purpose Multi and BetaPro NASDAQ

Assuming the 90 days trading horizon Purpose Multi Strategy Market is expected to under-perform the BetaPro NASDAQ. But the etf apears to be less risky and, when comparing its historical volatility, Purpose Multi Strategy Market is 3.77 times less risky than BetaPro NASDAQ. The etf trades about -0.1 of its potential returns per unit of risk. The BetaPro NASDAQ 100 2x is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,007  in BetaPro NASDAQ 100 2x on October 9, 2024 and sell it today you would earn a total of  22.00  from holding BetaPro NASDAQ 100 2x or generate 2.18% return on investment over 90 days.

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

Purpose Multi Strategy Market  vs.  BetaPro NASDAQ 100 2x

Purpose Multi Strategy

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Purpose Multi Strategy Market are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Purpose Multi 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

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 latest unfluctuating performance, the Etf's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with Purpose Multi and BetaPro NASDAQ

The main advantage of trading using opposite Purpose Multi and BetaPro NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Purpose Multi 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 Purpose Multi Strategy Market 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.