Correlation Between The Gold and Ultrabear Profund

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

By analyzing existing cross correlation between The Gold Bullion and Ultrabear Profund Ultrabear, you can compare the effects of market volatilities on The Gold and Ultrabear 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 The Gold with a short position of Ultrabear Profund. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Gold and Ultrabear Profund.

Diversification Opportunities for The Gold and Ultrabear Profund

0.17

Correlation Coefficient

The Gold  Ultrabear Profund

Average diversification

The 3 months correlation between The and Ultrabear is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion and Ultrabear Profund Ultrabear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrabear Profund and The Gold 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 The Gold Bullion are associated (or correlated) with Ultrabear Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrabear Profund has no effect on the direction of The Gold i.e., The Gold and Ultrabear Profund go up and down completely randomly.

Pair Corralation between The Gold and Ultrabear Profund

Assuming the 90 days horizon The Gold Bullion is expected to generate 0.79 times more return on investment than Ultrabear Profund. However, The Gold Bullion is 1.27 times less risky than Ultrabear Profund. It trades about 0.01 of its potential returns per unit of risk. Ultrabear Profund Ultrabear is currently generating about -0.08 per unit of risk. If you would invest  1,978  in The Gold Bullion on October 10, 2024 and sell it today you would earn a total of  24.00  from holding The Gold Bullion or generate 1.21% return on investment over 90 days.

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

The Gold Bullion  vs.  Ultrabear Profund Ultrabear

Gold Bullion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gold Bullion 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 fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Ultrabear Profund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultrabear Profund Ultrabear has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ultrabear 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 The Gold and Ultrabear Profund

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

The idea behind The Gold Bullion and Ultrabear Profund Ultrabear 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.