Correlation Between Swan Defined and Semiconductor Ultrasector

Can any of the company-specific risk be diversified away by investing in both Swan Defined and Semiconductor Ultrasector 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 Swan Defined and Semiconductor Ultrasector into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Swan Defined Risk and Semiconductor Ultrasector Profund, you can compare the effects of market volatilities on Swan Defined and Semiconductor Ultrasector 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 Swan Defined with a short position of Semiconductor Ultrasector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Defined and Semiconductor Ultrasector.

Diversification Opportunities for Swan Defined and Semiconductor Ultrasector

0.75

Correlation Coefficient

Swan Defined  Semiconductor Ultrasector

Poor diversification

The 3 months correlation between Swan and Semiconductor is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Swan Defined Risk and Semiconductor Ultrasector Prof in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Ultrasector and Swan Defined 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 Swan Defined Risk are associated (or correlated) with Semiconductor Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semiconductor Ultrasector has no effect on the direction of Swan Defined i.e., Swan Defined and Semiconductor Ultrasector go up and down completely randomly.

Pair Corralation between Swan Defined and Semiconductor Ultrasector

Assuming the 90 days horizon Swan Defined Risk is expected to generate 0.2 times more return on investment than Semiconductor Ultrasector. However, Swan Defined Risk is 4.92 times less risky than Semiconductor Ultrasector. It trades about -0.15 of its potential returns per unit of risk. Semiconductor Ultrasector Profund is currently generating about -0.1 per unit of risk. If you would invest  1,492  in Swan Defined Risk on December 24, 2024 and sell it today you would lose (135.00) from holding Swan Defined Risk or give up 9.05% of portfolio value over 90 days.

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

Swan Defined Risk  vs.  Semiconductor Ultrasector Prof

Swan Defined Risk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swan Defined Risk 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.

Semiconductor Ultrasector

Risk-Adjusted Performance

Very Weak

Over the last 90 days Semiconductor Ultrasector Profund 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 forward 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.

Pair Trading with Swan Defined and Semiconductor Ultrasector

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

The idea behind Swan Defined Risk and Semiconductor Ultrasector Profund 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.