Correlation Between Grizzly Short and Ultrashort Dow

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

By analyzing existing cross correlation between Grizzly Short Fund and Ultrashort Dow 30, you can compare the effects of market volatilities on Grizzly Short and Ultrashort Dow 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 Grizzly Short with a short position of Ultrashort Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grizzly Short and Ultrashort Dow.

Diversification Opportunities for Grizzly Short and Ultrashort Dow

0.75

Correlation Coefficient

Grizzly Short  Ultrashort Dow

Poor diversification

The 3 months correlation between Grizzly and Ultrashort is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Grizzly Short Fund and Ultrashort Dow 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrashort Dow 30 and Grizzly Short 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 Grizzly Short Fund are associated (or correlated) with Ultrashort Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrashort Dow 30 has no effect on the direction of Grizzly Short i.e., Grizzly Short and Ultrashort Dow go up and down completely randomly.

Pair Corralation between Grizzly Short and Ultrashort Dow

Assuming the 90 days horizon Grizzly Short Fund is expected to generate 0.66 times more return on investment than Ultrashort Dow. However, Grizzly Short Fund is 1.51 times less risky than Ultrashort Dow. It trades about -0.05 of its potential returns per unit of risk. Ultrashort Dow 30 is currently generating about -0.07 per unit of risk. If you would invest  652.00  in Grizzly Short Fund on October 4, 2024 and sell it today you would lose (95.00) from holding Grizzly Short Fund or give up 14.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.7%
Values	Daily Returns

Grizzly Short Fund  vs.  Ultrashort Dow 30

Grizzly Short

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ultrashort Dow 30

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultrashort Dow 30 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ultrashort Dow is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grizzly Short and Ultrashort Dow

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

The idea behind Grizzly Short Fund and Ultrashort Dow 30 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 Stocks Directory module to find actively traded stocks across global markets.