Correlation Between Ultra Nasdaq-100 and Sp Midcap
Can any of the company-specific risk be diversified away by investing in both Ultra Nasdaq-100 and Sp Midcap 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 Ultra Nasdaq-100 and Sp Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Nasdaq 100 Profunds and Sp Midcap Index, you can compare the effects of market volatilities on Ultra Nasdaq-100 and Sp Midcap 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 Ultra Nasdaq-100 with a short position of Sp Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Nasdaq-100 and Sp Midcap.
Diversification Opportunities for Ultra Nasdaq-100 and Sp Midcap
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ultra and SPMIX is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Nasdaq 100 Profunds and Sp Midcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Midcap Index and Ultra Nasdaq-100 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 Ultra Nasdaq 100 Profunds are associated (or correlated) with Sp Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Midcap Index has no effect on the direction of Ultra Nasdaq-100 i.e., Ultra Nasdaq-100 and Sp Midcap go up and down completely randomly.
Pair Corralation between Ultra Nasdaq-100 and Sp Midcap
Assuming the 90 days horizon Ultra Nasdaq 100 Profunds is expected to generate 1.93 times more return on investment than Sp Midcap. However, Ultra Nasdaq-100 is 1.93 times more volatile than Sp Midcap Index. It trades about 0.37 of its potential returns per unit of risk. Sp Midcap Index is currently generating about 0.22 per unit of risk. If you would invest 8,574 in Ultra Nasdaq 100 Profunds on April 23, 2025 and sell it today you would earn a total of 4,365 from holding Ultra Nasdaq 100 Profunds or generate 50.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Nasdaq 100 Profunds vs. Sp Midcap Index
Performance |
| Timeline |
| Ultra Nasdaq 100 |
| Sp Midcap Index |
Ultra Nasdaq-100 and Sp Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Nasdaq-100 and Sp Midcap
The main advantage of trading using opposite Ultra Nasdaq-100 and Sp Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Nasdaq-100 position performs unexpectedly, Sp Midcap 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 Sp Midcap will offset losses from the drop in Sp Midcap's long position.The idea behind Ultra Nasdaq 100 Profunds and Sp Midcap Index 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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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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