Correlation Between Evolve FANGMA and BetaPro NASDAQ

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

By analyzing existing cross correlation between Evolve FANGMA Index and BetaPro NASDAQ 100 2x, you can compare the effects of market volatilities on Evolve FANGMA and BetaPro 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 Evolve FANGMA with a short position of BetaPro NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve FANGMA and BetaPro NASDAQ.

Diversification Opportunities for Evolve FANGMA and BetaPro NASDAQ

0.98

Correlation Coefficient

Evolve FANGMA  BetaPro NASDAQ

Almost no diversification

The 3 months correlation between Evolve and BetaPro is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Evolve FANGMA Index and BetaPro NASDAQ 100 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro NASDAQ 100 and Evolve FANGMA 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 Evolve FANGMA Index are associated (or correlated) with BetaPro NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro NASDAQ 100 has no effect on the direction of Evolve FANGMA i.e., Evolve FANGMA and BetaPro NASDAQ go up and down completely randomly.

Pair Corralation between Evolve FANGMA and BetaPro NASDAQ

Assuming the 90 days trading horizon Evolve FANGMA is expected to generate 1.95 times less return on investment than BetaPro NASDAQ. But when comparing it to its historical volatility, Evolve FANGMA Index is 1.76 times less risky than BetaPro NASDAQ. It trades about 0.35 of its potential returns per unit of risk. BetaPro NASDAQ 100 2x is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  1,690  in BetaPro NASDAQ 100 2x on April 22, 2025 and sell it today you would earn a total of  944.00  from holding BetaPro NASDAQ 100 2x or generate 55.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Evolve FANGMA Index  vs.  BetaPro NASDAQ 100 2x

Evolve FANGMA Index

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve FANGMA Index are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Evolve FANGMA displayed solid returns over the last few months and may actually be approaching a breakup point.

BetaPro NASDAQ 100

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in BetaPro NASDAQ 100 2x are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, BetaPro NASDAQ displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolve FANGMA and BetaPro NASDAQ

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

The idea behind Evolve FANGMA Index and BetaPro NASDAQ 100 2x 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.