Correlation Between Ultra Fund and One Choice

Can any of the company-specific risk be diversified away by investing in both Ultra Fund and One Choice 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 Ultra Fund and One Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ultra Fund C and One Choice 2050, you can compare the effects of market volatilities on Ultra Fund and One Choice 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 Ultra Fund with a short position of One Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Fund and One Choice.

Diversification Opportunities for Ultra Fund and One Choice

0.79

Correlation Coefficient

Ultra Fund  One Choice

Poor diversification

The 3 months correlation between Ultra and One is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Fund C and One Choice 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice 2050 and Ultra Fund 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 Ultra Fund C are associated (or correlated) with One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice 2050 has no effect on the direction of Ultra Fund i.e., Ultra Fund and One Choice go up and down completely randomly.

Pair Corralation between Ultra Fund and One Choice

Assuming the 90 days horizon Ultra Fund C is expected to under-perform the One Choice. In addition to that, Ultra Fund is 1.99 times more volatile than One Choice 2050. It trades about 0.0 of its total potential returns per unit of risk. One Choice 2050 is currently generating about 0.15 per unit of volatility. If you would invest  1,485  in One Choice 2050 on October 26, 2024 and sell it today you would earn a total of  25.00  from holding One Choice 2050 or generate 1.68% return on investment over 90 days.

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

Ultra Fund C  vs.  One Choice 2050

Ultra Fund C

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ultra Fund C are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Ultra Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

One Choice 2050

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days One Choice 2050 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, One Choice is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ultra Fund and One Choice

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

The idea behind Ultra Fund C and One Choice 2050 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.