Correlation Between Dow 2x and Europe 125x
Can any of the company-specific risk be diversified away by investing in both Dow 2x and Europe 125x 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 Dow 2x and Europe 125x into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow 2x Strategy and Europe 125x Strategy, you can compare the effects of market volatilities on Dow 2x and Europe 125x 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 Dow 2x with a short position of Europe 125x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow 2x and Europe 125x.
Diversification Opportunities for Dow 2x and Europe 125x
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Europe is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dow 2x Strategy and Europe 125x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europe 125x Strategy and Dow 2x 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 Dow 2x Strategy are associated (or correlated) with Europe 125x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europe 125x Strategy has no effect on the direction of Dow 2x i.e., Dow 2x and Europe 125x go up and down completely randomly.
Pair Corralation between Dow 2x and Europe 125x
Assuming the 90 days horizon Dow 2x Strategy is expected to under-perform the Europe 125x. In addition to that, Dow 2x is 1.5 times more volatile than Europe 125x Strategy. It trades about -0.03 of its total potential returns per unit of risk. Europe 125x Strategy is currently generating about 0.21 per unit of volatility. If you would invest 10,020 in Europe 125x Strategy on December 27, 2024 and sell it today you would earn a total of 1,463 from holding Europe 125x Strategy or generate 14.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Dow 2x Strategy vs. Europe 125x Strategy
Performance |
Timeline |
Dow 2x Strategy |
Europe 125x Strategy |
Dow 2x and Europe 125x Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dow 2x and Europe 125x
The main advantage of trading using opposite Dow 2x and Europe 125x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow 2x position performs unexpectedly, Europe 125x 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 Europe 125x will offset losses from the drop in Europe 125x's long position.Dow 2x vs. Sp 500 2x | Dow 2x vs. Inverse Dow 2x | Dow 2x vs. Nasdaq 100 2x Strategy | Dow 2x vs. Russell 2000 2x |
Europe 125x vs. Jhancock Disciplined Value | Europe 125x vs. Transamerica Large Cap | Europe 125x vs. Allianzgi Nfj Large Cap | Europe 125x vs. Vest Large Cap |
Check out your portfolio center.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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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