Correlation Between Technology Fund and Japan 2x

Can any of the company-specific risk be diversified away by investing in both Technology Fund and Japan 2x 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 Technology Fund and Japan 2x into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Technology Fund Class and Japan 2x Strategy, you can compare the effects of market volatilities on Technology Fund and Japan 2x 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 Technology Fund with a short position of Japan 2x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Fund and Japan 2x.

Diversification Opportunities for Technology Fund and Japan 2x

0.74

Correlation Coefficient

Technology Fund  Japan 2x

Poor diversification

The 3 months correlation between Technology and Japan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Technology Fund Class and Japan 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan 2x Strategy and Technology Fund 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 Technology Fund Class are associated (or correlated) with Japan 2x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan 2x Strategy has no effect on the direction of Technology Fund i.e., Technology Fund and Japan 2x go up and down completely randomly.

Pair Corralation between Technology Fund and Japan 2x

Assuming the 90 days horizon Technology Fund is expected to generate 1.6 times less return on investment than Japan 2x. But when comparing it to its historical volatility, Technology Fund Class is 2.69 times less risky than Japan 2x. It trades about 0.19 of its potential returns per unit of risk. Japan 2x Strategy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  13,560  in Japan 2x Strategy on May 27, 2025 and sell it today you would earn a total of  2,391  from holding Japan 2x Strategy or generate 17.63% return on investment over 90 days.

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

Technology Fund Class  vs.  Japan 2x Strategy

Technology Fund Class

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Fund Class are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Technology Fund may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Japan 2x Strategy

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Japan 2x Strategy are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Japan 2x showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Technology Fund and Japan 2x

The main advantage of trading using opposite Technology Fund and Japan 2x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Fund position performs unexpectedly, Japan 2x 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 Japan 2x will offset losses from the drop in Japan 2x's long position.

The idea behind Technology Fund Class and Japan 2x 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..