Correlation Between Inverse Sp and Inverse Nasdaq-100

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Can any of the company-specific risk be diversified away by investing in both Inverse Sp and Inverse Nasdaq-100 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 Inverse Sp and Inverse Nasdaq-100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Sp 500 and Inverse Nasdaq 100 2x, you can compare the effects of market volatilities on Inverse Sp and Inverse Nasdaq-100 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 Inverse Sp with a short position of Inverse Nasdaq-100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Sp and Inverse Nasdaq-100.

Diversification Opportunities for Inverse Sp and Inverse Nasdaq-100

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Inverse and Inverse is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding INVERSE SP 500 and INVERSE NASDAQ-100 2X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Nasdaq-100 and Inverse Sp 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 Inverse Sp 500 are associated (or correlated) with Inverse Nasdaq-100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Nasdaq-100 has no effect on the direction of Inverse Sp i.e., Inverse Sp and Inverse Nasdaq-100 go up and down completely randomly.

Pair Corralation between Inverse Sp and Inverse Nasdaq-100

If you would invest  0.00  in Inverse Nasdaq 100 2x on December 29, 2023 and sell it today you would earn a total of  0.00  from holding Inverse Nasdaq 100 2x or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

INVERSE SP 500  vs.  INVERSE NASDAQ-100 2X

 Performance 
       Timeline  
Inverse Sp 500 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Inverse Sp 500 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Inverse Sp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Inverse Nasdaq-100 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Inverse Nasdaq 100 2x 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 2024. The current disturbance may also be a sign of long term up-swing for the fund investors.

Inverse Sp and Inverse Nasdaq-100 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Inverse Sp and Inverse Nasdaq-100

The main advantage of trading using opposite Inverse Sp and Inverse Nasdaq-100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Sp position performs unexpectedly, Inverse Nasdaq-100 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 Inverse Nasdaq-100 will offset losses from the drop in Inverse Nasdaq-100's long position.
The idea behind Inverse Sp 500 and Inverse 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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