Correlation Between Inverse Nasdaq and Energy Fund
Can any of the company-specific risk be diversified away by investing in both Inverse Nasdaq and Energy Fund 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 Nasdaq and Energy Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Nasdaq 100 Strategy and Energy Fund Class, you can compare the effects of market volatilities on Inverse Nasdaq and Energy Fund 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 Nasdaq with a short position of Energy Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Nasdaq and Energy Fund.
Diversification Opportunities for Inverse Nasdaq and Energy Fund
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Inverse and Energy is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Nasdaq 100 Strategy and Energy Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fund Class and Inverse Nasdaq 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 Nasdaq 100 Strategy are associated (or correlated) with Energy Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fund Class has no effect on the direction of Inverse Nasdaq i.e., Inverse Nasdaq and Energy Fund go up and down completely randomly.
Pair Corralation between Inverse Nasdaq and Energy Fund
Assuming the 90 days horizon Inverse Nasdaq 100 Strategy is expected to under-perform the Energy Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Inverse Nasdaq 100 Strategy is 1.44 times less risky than Energy Fund. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Energy Fund Class is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 20,542 in Energy Fund Class on June 1, 2025 and sell it today you would earn a total of 2,401 from holding Energy Fund Class or generate 11.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Nasdaq 100 Strategy vs. Energy Fund Class
Performance |
| Timeline |
| Inverse Nasdaq 100 |
| Energy Fund Class |
Inverse Nasdaq and Energy Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Nasdaq and Energy Fund
The main advantage of trading using opposite Inverse Nasdaq and Energy Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Nasdaq position performs unexpectedly, Energy Fund 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 Energy Fund will offset losses from the drop in Energy Fund's long position.| Inverse Nasdaq vs. Abr 7525 Volatility | Inverse Nasdaq vs. Iaadx | Inverse Nasdaq vs. Fdzbpx | Inverse Nasdaq vs. Ips Strategic Capital |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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