Correlation Between Semiconductor Ultrasector and High Yield

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

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

Diversification Opportunities for Semiconductor Ultrasector and High Yield

-0.58

Correlation Coefficient

Semiconductor Ultrasector  High Yield

Excellent diversification

The 3 months correlation between Semiconductor and High is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Ultrasector Prof and High Yield Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Bond and Semiconductor Ultrasector 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 Semiconductor Ultrasector Profund are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Bond has no effect on the direction of Semiconductor Ultrasector i.e., Semiconductor Ultrasector and High Yield go up and down completely randomly.

Pair Corralation between Semiconductor Ultrasector and High Yield

Assuming the 90 days horizon Semiconductor Ultrasector Profund is expected to under-perform the High Yield. In addition to that, Semiconductor Ultrasector is 25.98 times more volatile than High Yield Bond. It trades about -0.09 of its total potential returns per unit of risk. High Yield Bond is currently generating about 0.13 per unit of volatility. If you would invest  966.00  in High Yield Bond on December 22, 2024 and sell it today you would earn a total of  15.00  from holding High Yield Bond or generate 1.55% return on investment over 90 days.

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

Semiconductor Ultrasector Prof  vs.  High Yield Bond

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.

High Yield Bond

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in High Yield Bond are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, High Yield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Semiconductor Ultrasector and High Yield

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

The idea behind Semiconductor Ultrasector Profund and High Yield Bond 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.