Correlation Between Nasdaq-100 Profund and Short Small-cap

Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Profund and Short Small-cap 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 Nasdaq-100 Profund and Short Small-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 Profund Nasdaq 100 and Short Small Cap Profund, you can compare the effects of market volatilities on Nasdaq-100 Profund and Short Small-cap 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 Nasdaq-100 Profund with a short position of Short Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Profund and Short Small-cap.

Diversification Opportunities for Nasdaq-100 Profund and Short Small-cap

-0.98

Correlation Coefficient

Nasdaq-100 Profund  Short Small-cap

Pay attention - limited upside

The 3 months correlation between Nasdaq-100 and Short is -0.98. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Profund Nasdaq 100 and Short Small Cap Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Small Cap and Nasdaq-100 Profund 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 Nasdaq 100 Profund Nasdaq 100 are associated (or correlated) with Short Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Small Cap has no effect on the direction of Nasdaq-100 Profund i.e., Nasdaq-100 Profund and Short Small-cap go up and down completely randomly.

Pair Corralation between Nasdaq-100 Profund and Short Small-cap

Assuming the 90 days horizon Nasdaq 100 Profund Nasdaq 100 is expected to under-perform the Short Small-cap. In addition to that, Nasdaq-100 Profund is 1.16 times more volatile than Short Small Cap Profund. It trades about -0.03 of its total potential returns per unit of risk. Short Small Cap Profund is currently generating about 0.08 per unit of volatility. If you would invest  4,953  in Short Small Cap Profund on February 3, 2025 and sell it today you would earn a total of  498.00  from holding Short Small Cap Profund or generate 10.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Nasdaq 100 Profund Nasdaq 100  vs.  Short Small Cap Profund

Nasdaq 100 Profund

Risk-Adjusted Performance

Very Weak

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

Short Small Cap

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Short Small Cap Profund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Short Small-cap may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Nasdaq-100 Profund and Short Small-cap

The main advantage of trading using opposite Nasdaq-100 Profund and Short Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Profund position performs unexpectedly, Short Small-cap 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 Small-cap will offset losses from the drop in Short Small-cap's long position.

The idea behind Nasdaq 100 Profund Nasdaq 100 and Short Small Cap Profund 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.