# Correlation Between Japan 2x and Nasdaq-100(r)

Can any of the company-specific risk be diversified away by investing in both Japan 2x 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 Japan 2x 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 Japan 2x Strategy and Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Japan 2x 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 Japan 2x with a short position of Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan 2x and Nasdaq-100(r).

## Diversification Opportunities for Japan 2x and Nasdaq-100(r)

0.14 | Correlation Coefficient |

### Average diversification

The 3 months correlation between Japan and Nasdaq-100(r) is

**0.14**. Overlapping area represents the amount of risk that can be diversified away by holding Japan 2x Strategy 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 Japan 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 Japan 2x Strategy 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 Japan 2x i.e., Japan 2x and Nasdaq-100(r) go up and down completely randomly.## Pair Corralation between Japan 2x and Nasdaq-100(r)

Assuming the 90 days horizon Japan 2x Strategy is expected to generate 1.04 times more return on investment than Nasdaq-100(r). However, Japan 2x is 1.04 times more volatile than Nasdaq 100 2x Strategy. It trades about 0.32 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.17 per unit of risk. If you would invest

**11,590**in Japan 2x Strategy on**April 14, 2024**and sell it today you would**earn a total of 1,426**from holding Japan 2x Strategy or generate**12.3%**return on investment over**90**days.Time Period | 3 Months [change] |

Direction | Moves Together |

Strength | Insignificant |

Accuracy | 100.0% |

Values | Daily Returns |

## Japan 2x Strategy vs. Nasdaq 100 2x Strategy

Performance |

Timeline |

Japan 2x Strategy |

Nasdaq 100 2x |

## Japan 2x and Nasdaq-100(r) Volatility Contrast

Predicted Return Density |

Returns |

## Pair Trading with Japan 2x and Nasdaq-100(r)

The main advantage of trading using opposite Japan 2x and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan 2x 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.Japan 2x vs. Basic Materials Fund | ||

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Nasdaq-100(r) vs. Basic Materials Fund | ||

Nasdaq-100(r) vs. Basic Materials Fund | ||

Nasdaq-100(r) vs. Banking Fund Class | ||

Nasdaq-100(r) vs. Basic Materials Fund |

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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