Correlation Between Small-cap Value and Bull Profund

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

By analyzing existing cross correlation between Small Cap Value Profund and Bull Profund Bull, you can compare the effects of market volatilities on Small-cap Value and Bull 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 Small-cap Value with a short position of Bull Profund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small-cap Value and Bull Profund.

Diversification Opportunities for Small-cap Value and Bull Profund

0.91

Correlation Coefficient

Small-cap Value  Bull Profund

Almost no diversification

The 3 months correlation between Small-cap and Bull is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Profund and Bull Profund Bull in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bull Profund Bull and Small-cap Value 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 Small Cap Value Profund are associated (or correlated) with Bull Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bull Profund Bull has no effect on the direction of Small-cap Value i.e., Small-cap Value and Bull Profund go up and down completely randomly.

Pair Corralation between Small-cap Value and Bull Profund

Assuming the 90 days horizon Small Cap Value Profund is expected to under-perform the Bull Profund. In addition to that, Small-cap Value is 1.07 times more volatile than Bull Profund Bull. It trades about -0.14 of its total potential returns per unit of risk. Bull Profund Bull is currently generating about -0.09 per unit of volatility. If you would invest  5,681  in Bull Profund Bull on December 25, 2024 and sell it today you would lose (319.00) from holding Bull Profund Bull or give up 5.62% of portfolio value over 90 days.

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

Small Cap Value Profund  vs.  Bull Profund Bull

Small Cap Value

Risk-Adjusted Performance

Very Weak

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

Bull Profund Bull

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Small Cap Value Profund and Bull Profund Bull 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.