Correlation Between MegaShort Semiconductors and MegaShort NASDAQ

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

By analyzing existing cross correlation between MegaShort Semiconductors Daily and MegaShort NASDAQ 100 Daily, you can compare the effects of market volatilities on MegaShort Semiconductors and MegaShort NASDAQ 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 MegaShort Semiconductors with a short position of MegaShort NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of MegaShort Semiconductors and MegaShort NASDAQ.

Diversification Opportunities for MegaShort Semiconductors and MegaShort NASDAQ

0.9

Correlation Coefficient

MegaShort Semiconductors  MegaShort NASDAQ

Almost no diversification

The 3 months correlation between MegaShort and MegaShort is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding MegaShort Semiconductors Daily and MegaShort NASDAQ 100 Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MegaShort NASDAQ 100 and MegaShort Semiconductors 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 MegaShort Semiconductors Daily are associated (or correlated) with MegaShort NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MegaShort NASDAQ 100 has no effect on the direction of MegaShort Semiconductors i.e., MegaShort Semiconductors and MegaShort NASDAQ go up and down completely randomly.

Pair Corralation between MegaShort Semiconductors and MegaShort NASDAQ

Assuming the 90 days trading horizon MegaShort Semiconductors Daily is expected to under-perform the MegaShort NASDAQ. In addition to that, MegaShort Semiconductors is 2.05 times more volatile than MegaShort NASDAQ 100 Daily. It trades about -0.16 of its total potential returns per unit of risk. MegaShort NASDAQ 100 Daily is currently generating about -0.17 per unit of volatility. If you would invest  1,663  in MegaShort NASDAQ 100 Daily on July 6, 2025 and sell it today you would lose (349.00) from holding MegaShort NASDAQ 100 Daily or give up 20.99% of portfolio value over 90 days.

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

MegaShort Semiconductors Daily  vs.  MegaShort NASDAQ 100 Daily

MegaShort Semiconductors

Risk-Adjusted Performance

Weakest

Over the last 90 days MegaShort Semiconductors Daily has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in November 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

MegaShort NASDAQ 100

Risk-Adjusted Performance

Weakest

Over the last 90 days MegaShort NASDAQ 100 Daily has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in November 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with MegaShort Semiconductors and MegaShort NASDAQ

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

The idea behind MegaShort Semiconductors Daily and MegaShort NASDAQ 100 Daily 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.