Correlation Between Fundamental Large and Ultrabull Profund

Can any of the company-specific risk be diversified away by investing in both Fundamental Large and Ultrabull Profund 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 Fundamental Large and Ultrabull Profund into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Fundamental Large and Ultrabull Profund

0.66

Correlation Coefficient

Fundamental Large  Ultrabull Profund

Poor diversification

The 3 months correlation between Fundamental and Ultrabull is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Large Cap and Ultrabull Profund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrabull Profund and Fundamental Large 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 Fundamental Large Cap are associated (or correlated) with Ultrabull Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrabull Profund has no effect on the direction of Fundamental Large i.e., Fundamental Large and Ultrabull Profund go up and down completely randomly.

Pair Corralation between Fundamental Large and Ultrabull Profund

Assuming the 90 days horizon Fundamental Large Cap is expected to under-perform the Ultrabull Profund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fundamental Large Cap is 1.24 times less risky than Ultrabull Profund. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Ultrabull Profund Investor is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  14,914  in Ultrabull Profund Investor on December 2, 2024 and sell it today you would lose (1,008) from holding Ultrabull Profund Investor or give up 6.76% of portfolio value over 90 days.

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

Fundamental Large Cap  vs.  Ultrabull Profund Investor

Fundamental Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fundamental Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Ultrabull Profund

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Fundamental Large and Ultrabull Profund

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

The idea behind Fundamental Large Cap and Ultrabull Profund Investor 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.