Correlation Between Europe 125x and Inverse Dow
Can any of the company-specific risk be diversified away by investing in both Europe 125x and Inverse Dow 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 Europe 125x and Inverse Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europe 125x Strategy and Inverse Dow 2x, you can compare the effects of market volatilities on Europe 125x and Inverse Dow 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 Europe 125x with a short position of Inverse Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europe 125x and Inverse Dow.
Diversification Opportunities for Europe 125x and Inverse Dow
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Europe and Inverse is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Europe 125x Strategy and Inverse Dow 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Dow 2x and Europe 125x 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 Europe 125x Strategy are associated (or correlated) with Inverse Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Dow 2x has no effect on the direction of Europe 125x i.e., Europe 125x and Inverse Dow go up and down completely randomly.
Pair Corralation between Europe 125x and Inverse Dow
Assuming the 90 days horizon Europe 125x Strategy is expected to generate 0.65 times more return on investment than Inverse Dow. However, Europe 125x Strategy is 1.54 times less risky than Inverse Dow. It trades about 0.11 of its potential returns per unit of risk. Inverse Dow 2x is currently generating about -0.12 per unit of risk. If you would invest 9,253 in Europe 125x Strategy on August 16, 2025 and sell it today you would earn a total of 556.00 from holding Europe 125x Strategy or generate 6.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europe 125x Strategy vs. Inverse Dow 2x
Performance |
| Timeline |
| Europe 125x Strategy |
| Inverse Dow 2x |
Europe 125x and Inverse Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europe 125x and Inverse Dow
The main advantage of trading using opposite Europe 125x and Inverse Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europe 125x position performs unexpectedly, Inverse Dow 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 Dow will offset losses from the drop in Inverse Dow's long position.| Europe 125x vs. Sierra E Retirement | Europe 125x vs. College Retirement Equities | Europe 125x vs. Cornerstone Moderately Aggressive | Europe 125x vs. Putnman Retirement Ready |
| Inverse Dow vs. Nuveen Large Cap | Inverse Dow vs. Siit Large Cap | Inverse Dow vs. Jhancock Disciplined Value | Inverse Dow vs. Qs Large Cap |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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