Correlation Between Banks Ultrasector and Hunter Small

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

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

Diversification Opportunities for Banks Ultrasector and Hunter Small

0.93

Correlation Coefficient

Banks Ultrasector  Hunter Small

Almost no diversification

The 3 months correlation between Banks and Hunter is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Banks Ultrasector Profund and Hunter Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunter Small Cap and Banks Ultrasector 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 Banks Ultrasector Profund are associated (or correlated) with Hunter Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunter Small Cap has no effect on the direction of Banks Ultrasector i.e., Banks Ultrasector and Hunter Small go up and down completely randomly.

Pair Corralation between Banks Ultrasector and Hunter Small

Assuming the 90 days horizon Banks Ultrasector Profund is expected to under-perform the Hunter Small. In addition to that, Banks Ultrasector is 2.21 times more volatile than Hunter Small Cap. It trades about -0.53 of its total potential returns per unit of risk. Hunter Small Cap is currently generating about -0.53 per unit of volatility. If you would invest  1,362  in Hunter Small Cap on September 24, 2024 and sell it today you would lose (119.00) from holding Hunter Small Cap or give up 8.74% of portfolio value over 90 days.

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

Banks Ultrasector Profund  vs.  Hunter Small Cap

Banks Ultrasector Profund

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Banks Ultrasector Profund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Banks Ultrasector may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hunter Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hunter Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Hunter Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Banks Ultrasector and Hunter Small

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

The idea behind Banks Ultrasector Profund and Hunter Small Cap 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.