Correlation Between Inverse Sp and Upright Growth

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

By analyzing existing cross correlation between Inverse Sp 500 and Upright Growth Income, you can compare the effects of market volatilities on Inverse Sp and Upright Growth 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 Inverse Sp with a short position of Upright Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Sp and Upright Growth.

Diversification Opportunities for Inverse Sp and Upright Growth

-0.94

Correlation Coefficient

Inverse Sp  Upright Growth

Pay attention - limited upside

The 3 months correlation between Inverse and Upright is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Sp 500 and Upright Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upright Growth Income and Inverse Sp 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 Inverse Sp 500 are associated (or correlated) with Upright Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upright Growth Income has no effect on the direction of Inverse Sp i.e., Inverse Sp and Upright Growth go up and down completely randomly.

Pair Corralation between Inverse Sp and Upright Growth

Assuming the 90 days horizon Inverse Sp 500 is expected to generate 0.37 times more return on investment than Upright Growth. However, Inverse Sp 500 is 2.74 times less risky than Upright Growth. It trades about 0.11 of its potential returns per unit of risk. Upright Growth Income is currently generating about -0.04 per unit of risk. If you would invest  9,830  in Inverse Sp 500 on December 22, 2024 and sell it today you would earn a total of  644.00  from holding Inverse Sp 500 or generate 6.55% return on investment over 90 days.

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

Inverse Sp 500  vs.  Upright Growth Income

Inverse Sp 500

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Inverse Sp 500 are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Inverse Sp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Upright Growth Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Upright Growth Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Inverse Sp and Upright Growth

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

The idea behind Inverse Sp 500 and Upright Growth Income 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.