Correlation Between Rising Rates and Short Nasdaq-100
Can any of the company-specific risk be diversified away by investing in both Rising Rates and Short 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 Rising Rates and Short Nasdaq-100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rising Rates Opportunity and Short Nasdaq 100 Profund, you can compare the effects of market volatilities on Rising Rates and Short 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 Rising Rates with a short position of Short Nasdaq-100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rising Rates and Short Nasdaq-100.
Diversification Opportunities for Rising Rates and Short Nasdaq-100
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rising and Short is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Rising Rates Opportunity and Short Nasdaq 100 Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Nasdaq 100 and Rising Rates 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 Rising Rates Opportunity are associated (or correlated) with Short 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 Short Nasdaq 100 has no effect on the direction of Rising Rates i.e., Rising Rates and Short Nasdaq-100 go up and down completely randomly.
Pair Corralation between Rising Rates and Short Nasdaq-100
Assuming the 90 days horizon Rising Rates Opportunity is expected to generate 0.44 times more return on investment than Short Nasdaq-100. However, Rising Rates Opportunity is 2.29 times less risky than Short Nasdaq-100. It trades about 0.09 of its potential returns per unit of risk. Short Nasdaq 100 Profund is currently generating about -0.08 per unit of risk. If you would invest 4,021 in Rising Rates Opportunity on April 1, 2025 and sell it today you would earn a total of 249.00 from holding Rising Rates Opportunity or generate 6.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rising Rates Opportunity vs. Short Nasdaq 100 Profund
Performance |
| Timeline |
| Rising Rates Opportunity |
| Short Nasdaq 100 |
Rising Rates and Short Nasdaq-100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rising Rates and Short Nasdaq-100
The main advantage of trading using opposite Rising Rates and Short Nasdaq-100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rising Rates position performs unexpectedly, Short 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 Short Nasdaq-100 will offset losses from the drop in Short Nasdaq-100's long position.| Rising Rates vs. Forum Real Estate | Rising Rates vs. Pender Real Estate | Rising Rates vs. Aew Real Estate | Rising Rates vs. Global Real Estate |
| Short Nasdaq-100 vs. Real Estate Ultrasector | Short Nasdaq-100 vs. Short Real Estate | Short Nasdaq-100 vs. Ultrashort Mid Cap Profund | Short Nasdaq-100 vs. Ultrashort Mid Cap Profund |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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