Correlation Between Inverse Nasdaq-100 and Technology Fund

Can any of the company-specific risk be diversified away by investing in both Inverse Nasdaq-100 and Technology 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-100 and Technology 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 Technology Fund Class, you can compare the effects of market volatilities on Inverse Nasdaq-100 and Technology 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-100 with a short position of Technology Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Nasdaq-100 and Technology Fund.

Diversification Opportunities for Inverse Nasdaq-100 and Technology Fund

-0.98

Correlation Coefficient

Inverse Nasdaq-100  Technology Fund

Pay attention - limited upside

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

Pair Corralation between Inverse Nasdaq-100 and Technology Fund

Assuming the 90 days horizon Inverse Nasdaq 100 Strategy is expected to under-perform the Technology Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Inverse Nasdaq 100 Strategy is 1.22 times less risky than Technology Fund. The mutual fund trades about -0.24 of its potential returns per unit of risk. The Technology Fund Class is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  14,310  in Technology Fund Class on May 2, 2025 and sell it today you would earn a total of  2,953  from holding Technology Fund Class or generate 20.64% return on investment over 90 days.

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

Inverse Nasdaq 100 Strategy  vs.  Technology Fund Class

Inverse Nasdaq 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inverse Nasdaq 100 Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Technology Fund Class

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Fund Class are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Technology Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inverse Nasdaq-100 and Technology Fund

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

The idea behind Inverse Nasdaq 100 Strategy and Technology Fund Class 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.