Correlation Between Profunds Ultrashort and Nasdaq-100 Index

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

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

Diversification Opportunities for Profunds Ultrashort and Nasdaq-100 Index

-0.99

Correlation Coefficient

Profunds Ultrashort  Nasdaq-100 Index

Pay attention - limited upside

The 3 months correlation between Profunds and Nasdaq-100 is -0.99. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Nasdaq 100 Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Index and Profunds Ultrashort 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 Profunds Ultrashort Nasdaq 100 are associated (or correlated) with Nasdaq-100 Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 Index has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Nasdaq-100 Index go up and down completely randomly.

Pair Corralation between Profunds Ultrashort and Nasdaq-100 Index

Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to under-perform the Nasdaq-100 Index. In addition to that, Profunds Ultrashort is 1.99 times more volatile than Nasdaq 100 Index Fund. It trades about -0.3 of its total potential returns per unit of risk. Nasdaq 100 Index Fund is currently generating about 0.33 per unit of volatility. If you would invest  2,114  in Nasdaq 100 Index Fund on April 30, 2025 and sell it today you would earn a total of  410.00  from holding Nasdaq 100 Index Fund or generate 19.39% return on investment over 90 days.

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

Profunds Ultrashort Nasdaq 100  vs.  Nasdaq 100 Index Fund

Profunds Ultrashort

Risk-Adjusted Performance

Very Weak

Over the last 90 days Profunds Ultrashort 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 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.

Nasdaq 100 Index

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 Index Fund are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Nasdaq-100 Index showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Profunds Ultrashort and Nasdaq-100 Index

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

The idea behind Profunds Ultrashort Nasdaq 100 and Nasdaq 100 Index Fund 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.