Correlation Between Large-cap Growth and Ultrabull Profund

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

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

Diversification Opportunities for Large-cap Growth and Ultrabull Profund

0.99

Correlation Coefficient

Large-cap Growth  Ultrabull Profund

No risk reduction

The 3 months correlation between Large-cap and Ultrabull is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund and Ultrabull Profund Ultrabull in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrabull Profund and Large-cap Growth 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 Large Cap Growth Profund 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 Large-cap Growth i.e., Large-cap Growth and Ultrabull Profund go up and down completely randomly.

Pair Corralation between Large-cap Growth and Ultrabull Profund

Assuming the 90 days horizon Large-cap Growth is expected to generate 1.76 times less return on investment than Ultrabull Profund. But when comparing it to its historical volatility, Large Cap Growth Profund is 1.58 times less risky than Ultrabull Profund. It trades about 0.28 of its potential returns per unit of risk. Ultrabull Profund Ultrabull is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  9,905  in Ultrabull Profund Ultrabull on September 3, 2024 and sell it today you would earn a total of  959.00  from holding Ultrabull Profund Ultrabull or generate 9.68% return on investment over 90 days.

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

Large Cap Growth Profund  vs.  Ultrabull Profund Ultrabull

Large Cap Growth

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Growth Profund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Large-cap Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ultrabull Profund

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ultrabull Profund Ultrabull are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ultrabull Profund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Large-cap Growth and Ultrabull Profund

The main advantage of trading using opposite Large-cap Growth and Ultrabull Profund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large-cap Growth 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 Large Cap Growth Profund and Ultrabull Profund Ultrabull 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.