Correlation Between Nasdaq-100(r) and Ultranasdaq-100 Profund

Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Ultranasdaq-100 Profund 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 Profund 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 Profund 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 Profund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Ultranasdaq-100 Profund.

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

1.0

Correlation Coefficient

Nasdaq-100(r)  Ultranasdaq-100 Profund

No risk reduction

The 3 months correlation between Nasdaq-100(r) and Ultranasdaq-100 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 Profund. 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 Profund go up and down completely randomly.

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

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 1.0 times more return on investment than Ultranasdaq-100 Profund. However, Nasdaq 100 2x Strategy is 1.0 times less risky than Ultranasdaq-100 Profund. It trades about -0.1 of its potential returns per unit of risk. Ultranasdaq 100 Profund Ultranasdaq 100 is currently generating about -0.11 per unit of risk. If you would invest  57,764  in Nasdaq 100 2x Strategy on December 23, 2024 and sell it today you would lose (10,199) from holding Nasdaq 100 2x Strategy or give up 17.66% of portfolio value 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

Very Weak

Over the last 90 days Nasdaq 100 2x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Ultranasdaq 100 Profund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultranasdaq 100 Profund Ultranasdaq 100 has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

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

The main advantage of trading using opposite Nasdaq-100(r) and Ultranasdaq-100 Profund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Ultranasdaq-100 Profund 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 Profund will offset losses from the drop in Ultranasdaq-100 Profund'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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.