Correlation Between Armada Hflr and Utilities Ultrasector

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

By analyzing existing cross correlation between Armada Hflr Pr and Utilities Ultrasector Profund, you can compare the effects of market volatilities on Armada Hflr and Utilities Ultrasector 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 Armada Hflr with a short position of Utilities Ultrasector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Utilities Ultrasector.

Diversification Opportunities for Armada Hflr and Utilities Ultrasector

0.5

Correlation Coefficient

Armada Hflr  Utilities Ultrasector

Very weak diversification

The 3 months correlation between Armada and Utilities is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Utilities Ultrasector Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Ultrasector and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Utilities Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Ultrasector has no effect on the direction of Armada Hflr i.e., Armada Hflr and Utilities Ultrasector go up and down completely randomly.

Pair Corralation between Armada Hflr and Utilities Ultrasector

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Utilities Ultrasector. In addition to that, Armada Hflr is 1.0 times more volatile than Utilities Ultrasector Profund. It trades about 0.0 of its total potential returns per unit of risk. Utilities Ultrasector Profund is currently generating about 0.08 per unit of volatility. If you would invest  5,321  in Utilities Ultrasector Profund on September 27, 2024 and sell it today you would earn a total of  1,757  from holding Utilities Ultrasector Profund or generate 33.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.63%
Values	Daily Returns

Armada Hflr Pr  vs.  Utilities Ultrasector Profund

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Utilities Ultrasector

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Utilities Ultrasector Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Armada Hflr and Utilities Ultrasector

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

The idea behind Armada Hflr Pr and Utilities Ultrasector Profund 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 Commodity Directory module to find actively traded commodities issued by global exchanges.