Correlation Between Smallcap Fund and Ultrabull Profund

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

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

Diversification Opportunities for Smallcap Fund and Ultrabull Profund

0.78

Correlation Coefficient

Smallcap Fund  Ultrabull Profund

Poor diversification

The 3 months correlation between Smallcap and Ultrabull is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Fund Fka and Ultrabull Profund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrabull Profund and Smallcap Fund 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 Smallcap Fund Fka 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 Smallcap Fund i.e., Smallcap Fund and Ultrabull Profund go up and down completely randomly.

Pair Corralation between Smallcap Fund and Ultrabull Profund

Assuming the 90 days horizon Smallcap Fund Fka is expected to under-perform the Ultrabull Profund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Smallcap Fund Fka is 1.47 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  14,710  in Ultrabull Profund Investor on October 9, 2024 and sell it today you would lose (574.00) from holding Ultrabull Profund Investor or give up 3.9% of portfolio value over 90 days.

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

Smallcap Fund Fka  vs.  Ultrabull Profund Investor

Smallcap Fund Fka

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ultrabull Profund

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ultrabull Profund Investor are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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 Smallcap Fund and Ultrabull Profund

The main advantage of trading using opposite Smallcap Fund and Ultrabull Profund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Fund 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 Smallcap Fund Fka 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.