Correlation Between Ultra Nasdaq-100 and Nasdaq-100(r)

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

By analyzing existing cross correlation between Ultra Nasdaq 100 Profunds and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Ultra Nasdaq-100 and Nasdaq-100(r) 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 Ultra Nasdaq-100 with a short position of Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Nasdaq-100 and Nasdaq-100(r).

Diversification Opportunities for Ultra Nasdaq-100 and Nasdaq-100(r)

1.0

Correlation Coefficient

Ultra Nasdaq-100  Nasdaq-100(r)

No risk reduction

The 3 months correlation between Ultra and Nasdaq-100(r) is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Nasdaq 100 Profunds and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x and Ultra Nasdaq-100 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 Ultra Nasdaq 100 Profunds are associated (or correlated) with Nasdaq-100(r). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Ultra Nasdaq-100 i.e., Ultra Nasdaq-100 and Nasdaq-100(r) go up and down completely randomly.

Pair Corralation between Ultra Nasdaq-100 and Nasdaq-100(r)

Assuming the 90 days horizon Ultra Nasdaq 100 Profunds is expected to under-perform the Nasdaq-100(r). In addition to that, Ultra Nasdaq-100 is 1.0 times more volatile than Nasdaq 100 2x Strategy. It trades about -0.08 of its total potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about -0.08 per unit of volatility. If you would invest  56,045  in Nasdaq 100 2x Strategy on December 28, 2024 and sell it today you would lose (8,323) from holding Nasdaq 100 2x Strategy or give up 14.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Ultra Nasdaq 100 Profunds  vs.  Nasdaq 100 2x Strategy

Ultra Nasdaq 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultra Nasdaq 100 Profunds 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 forward 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.

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 essential 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 Ultra Nasdaq-100 and Nasdaq-100(r)

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

The idea behind Ultra Nasdaq 100 Profunds and Nasdaq 100 2x Strategy 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.