{"url":"https://etfiq.com/academy/risk-and-execution/replaying-a-volatile-year/","section":"academy","title":"Replaying a volatile year: why the swings decide | ETFIQ","description":"Replay a real year of NVDA and TSLA daily moves through 2x and -2x funds and see why the size of the swings, not the year's move, decides the result.","as_of":"Nov 10, 2026","structured_data":[{"@type":"LearningResource","@id":"https://etfiq.com/academy/risk-and-execution/replaying-a-volatile-year/#lesson","name":"Replaying a volatile year: why the swings decide","description":"Over the year to Nov 10, 2026, NVDA ended 14.9% lower, yet 2 times its daily moves compounded to a 37.7% loss; NVDL lost 44.0%.","url":"https://etfiq.com/academy/risk-and-execution/replaying-a-volatile-year/","learningResourceType":"Lesson","teaches":"Why the size of the daily swings, not just the year's move, decides how a leveraged or inverse fund ends the year","educationalLevel":"Advanced","timeRequired":"PT7M","inLanguage":"en","isAccessibleForFree":true,"isPartOf":{"@type":"Course","@id":"https://etfiq.com/academy/risk-and-execution/#course","name":"Risk and Execution","url":"https://etfiq.com/academy/risk-and-execution/"},"position":1,"dateModified":"2026-11-10","author":{"@type":"Organization","name":"ETFIQ Research","url":"https://etfiq.com"},"publisher":{"@type":"Organization","name":"ETFIQ Research","url":"https://etfiq.com"}},{"@type":"FAQPage","@id":"https://etfiq.com/academy/risk-and-execution/replaying-a-volatile-year/#check","mainEntity":[{"@type":"Question","name":"Two stocks each end a year flat. Stock A had volatility of 20%, stock B 40%. Before costs, how does B's 2x daily fund's drag compare with A's?","acceptedAnswer":{"@type":"Answer","text":"About 4 times as large. drag grows with volatility squared: 0.4\u00b2 = 0.16 against 0.2\u00b2 = 0.04, 4 times."}},{"@type":"Question","name":"An index rose 10% over a choppy year. Which fund is most likely to have lost money before costs?","acceptedAnswer":{"@type":"Answer","text":"A \u22122x daily fund. the \u22122x fund starts 20 points behind and pays a factor of 3 on the swings, against 1 for +2x."}},{"@type":"Question","name":"You replay a 2x fund's year with the days in a different order. What happens to its compounded result before costs?","acceptedAnswer":{"@type":"Answer","text":"It stays the same. the result multiplies each day's (1 + 2 \u00d7 move), and order doesn't change a product."}}]},{"@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"ETFIQ","item":"https://etfiq.com/"},{"@type":"ListItem","position":2,"name":"Academy","item":"https://etfiq.com/academy/"},{"@type":"ListItem","position":3,"name":"Risk and Execution","item":"https://etfiq.com/academy/risk-and-execution/"},{"@type":"ListItem","position":4,"name":"Replaying a volatile year","item":"https://etfiq.com/academy/risk-and-execution/replaying-a-volatile-year/"}]},{"@type":"WebPage","name":"Replaying a volatile year: why the swings decide","description":"Replay a real year of NVDA and TSLA daily moves through 2x and -2x funds and see why the size of the swings, not the year's move, decides the result.","url":"https://etfiq.com/academy/risk-and-execution/replaying-a-volatile-year/","dateModified":"2026-11-10","isPartOf":{"@type":"WebSite","name":"ETFIQ","url":"https://etfiq.com"},"speakable":{"@type":"SpeakableSpecification","cssSelector":[".lede"]},"publisher":{"@id":"https://etfiq.com/#org"}}],"characters":5259,"truncated":false,"content":"ETFIQ / Academy / Risk and Execution / Replaying a volatile year \n \n Replaying a volatile year: why the swings decide\n Data as of Nov 10, 2026. Rebuilt every trading night.\n Over the year to Nov 10, 2026 , NVDA ended 14.9% lower , yet 2 times its daily moves compounded to a 37.7% loss ; NVDL lost 44.0% .\n Risk and Execution \u00b7 Lesson 1 of 4 1 2 3 4 \n Slide the amount to see each result in dollars. Amount (hypothetical) $10,000 On $10,000: NVDA \u2212$1,495, 2x each day, compounded \u2212$3,768, NVDL \u2212$4,402. Hypothetical amounts. \n The question\n My stock ended the year about flat. Why did the 2x fund on it lose so much?\n The idea\n You met the daily reset in Leveraged and inverse ETFs and the path effect in Leveraged decay in numbers . Over a whole year, what drives the path effect? Here \"path\" means the set of daily moves the stock made, not the order they came in. The answer: the size of the daily swings , measured as volatility (how widely daily moves spread, stated at a yearly rate). A rough guide for a fund that resets each day:\n Drag \u2248 (multiple\u00b2 \u2212 multiple) \u00f7 2 \u00d7 volatility\u00b2 \n It is a guide, not an exact rule: it is closest when the year's move is small. Two things follow: Drag grows with the square of the swings: double the volatility, about 4 times the drag.\n Inverse funds pay more. For +2x the factor is (4 \u2212 2) \u00f7 2 = 1 . For \u22122x it is (4 + 2) \u00f7 2 = 3 , the same as a +3x fund.\n \n Worked example\n One year, Nov 10, 2025 to Nov 10, 2026 .\n Case 1: a flat year with big swings (NVDA). \n Return \n NVDA \u221214.95% \n 2 \u00d7 the year \u221229.90% \n 2x each day, compounded \u221237.68% \n NVDL (2x NVDA fund) \u221244.02% \n The rough guide: NVDA's volatility was 38.46% a year. 1. Square it: 0.3846 \u00d7 0.3846 = 0.148 . 2. Multiply by the factor for 2x, which is 1: 0.148 , about 15 points of drag. 3. The real path effect: \u221237.68 \u2212 ( \u221229.90 ) = \u22127.78 points .\n Close. The swings, not NVDA's move, drove the compounded loss. NVDL's further \u22126.3 points is the fund's gap (fees and the cost of the swaps that give its exposure).\n Case 2: both sides lost (TSLA). TSLA fell 14.70% with volatility of 45.74% .\n 2x long (TSLL) \u22122x short (TSLQ) \n 2 \u00d7 the year \u221229.40% +29.40% \n Daily multiple, compounded \u221241.53% \u221226.30% \n Fund \u221248.44% \u221220.45% \n TSLA fell, and the short fund still lost: its factor of 3 turned a \"should-be\" +29% into \u221226.30% before costs.\n The common mistake\n \"Path dependence means the order of the days matters.\" For a fund that resets each day, it doesn't. The year's result multiplies each day's (1 + multiple \u00d7 move), and a product is the same in any order. What matters is how big the daily moves were . \"Shuffle the days\" shows it.\n Check your understanding\n Pick an answer to see why. Two of three right passes the lesson.\n 1. Two stocks each end a year flat. Stock A had volatility of 20%, stock B 40%. Before costs, how does B's 2x daily fund's drag compare with A's? A About the same B About twice as large C About 4 times as large D Smaller, because B's moves cancel out Answer: C. About 4 times as large. drag grows with volatility squared: 0.4\u00b2 = 0.16 against 0.2\u00b2 = 0.04, 4 times. Not B: volatility doubled, but the drag follows its square. 2. An index rose 10% over a choppy year. Which fund is most likely to have lost money before costs? A A \u22122x daily fund B A +2x daily fund C The index itself D None of them could lose Answer: A. A \u22122x daily fund. the \u22122x fund starts 20 points behind and pays a factor of 3 on the swings, against 1 for +2x. Not B: +2x starts about 20 points ahead and has the smaller factor. 3. You replay a 2x fund's year with the days in a different order. What happens to its compounded result before costs? A It changes a lot B It becomes 2 times the index's year C It always improves D It stays the same Answer: D. It stays the same. the result multiplies each day's (1 + 2 \u00d7 move), and order doesn't change a product. Not A: order matters for stop orders and multi-day stretches, not for a daily-reset fund's year. \n Takeaways\n Check the underlying's volatility before the multiple: drag grows with its square. \n Inverse funds carry more drag: \u22122x pays about 3 times what +2x pays on the same swings. \n A flat or falling year can cost both the long and the short fund. \n Do it on ETFIQ\n Replay your leveraged fund's year Your fund \n Where to next\n Next lesson: Flows and crowding: context, not a signal Risk and Execution: all lessons The explainer behind this lesson ETFIQ Academy How ETFIQ computes these numbers \n Cite this page. ETFIQ, Replaying a volatile year: why the swings decide, data as of Nov 10, 2026. https://etfiq.com/academy/risk-and-execution/replaying-a-volatile-year/ Free to use with attribution for data ETFIQ computes; issuer data stays under its owner's terms. The underlying files are at Open data .\n Other forms Plain ETFIQ, Replaying a volatile year: why the swings decide, data as of Nov 10, 2026. https://etfiq.com/academy/risk-and-execution/replaying-a-volatile-year/ APA ETFIQ. (Nov 10, 2026). Replaying a volatile year: why the swings decide. Retrieved from https://etfiq.com/academy/risk-and-execution/replaying-a-volatile-year/ Markdown [Replaying a volatile year: why the swings decide (ETFIQ, Nov 10, 2026)](https://etfiq.com/academy/risk-and-execution/replaying-a-volatile-year/)","source":"ETFIQ, independent ETF data. Recomputed nightly from public filings and prices.","publisher":{"@id":"https://etfiq.com/#org","name":"ETFIQ","url":"https://etfiq.com"},"license":"https://etfiq.com/license/","license_text":"Data ETFIQ computes is free to use with attribution: ETFIQ (etfiq.com). Issuer data stays under its owner's terms.","citation":"ETFIQ, Replaying a volatile year: why the swings decide, data as of Nov 10, 2026. https://etfiq.com/academy/risk-and-execution/replaying-a-volatile-year/"}