Correlation Between Rydex Inverse and Inverse Nasdaq-100

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

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

Diversification Opportunities for Rydex Inverse and Inverse Nasdaq-100

1.0

Correlation Coefficient

Rydex Inverse  Inverse Nasdaq-100

No risk reduction

The 3 months correlation between Rydex and Inverse is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Rydex Inverse Nasdaq 100 and Inverse Nasdaq 100 Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Nasdaq 100 and Rydex Inverse 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 Rydex Inverse Nasdaq 100 are associated (or correlated) with Inverse Nasdaq-100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Nasdaq 100 has no effect on the direction of Rydex Inverse i.e., Rydex Inverse and Inverse Nasdaq-100 go up and down completely randomly.

Pair Corralation between Rydex Inverse and Inverse Nasdaq-100

Assuming the 90 days horizon Rydex Inverse Nasdaq 100 is expected to under-perform the Inverse Nasdaq-100. In addition to that, Rydex Inverse is 2.01 times more volatile than Inverse Nasdaq 100 Strategy. It trades about -0.29 of its total potential returns per unit of risk. Inverse Nasdaq 100 Strategy is currently generating about -0.28 per unit of volatility. If you would invest  15,015  in Inverse Nasdaq 100 Strategy on May 1, 2025 and sell it today you would lose (2,112) from holding Inverse Nasdaq 100 Strategy or give up 14.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Rydex Inverse Nasdaq 100  vs.  Inverse Nasdaq 100 Strategy

Rydex Inverse Nasdaq

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rydex Inverse Nasdaq 100 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 fundamental 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.

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.

Pair Trading with Rydex Inverse and Inverse Nasdaq-100

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

The idea behind Rydex Inverse Nasdaq 100 and Inverse Nasdaq 100 Strategy 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.