Correlation Between Ultralatin America and Profunds-large Cap

Can any of the company-specific risk be diversified away by investing in both Ultralatin America and Profunds-large Cap 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 Ultralatin America and Profunds-large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ultralatin America Profund and Profunds Large Cap Growth, you can compare the effects of market volatilities on Ultralatin America and Profunds-large Cap 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 Ultralatin America with a short position of Profunds-large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultralatin America and Profunds-large Cap.

Diversification Opportunities for Ultralatin America and Profunds-large Cap

-0.64

Correlation Coefficient

Ultralatin America  Profunds-large Cap

Excellent diversification

The 3 months correlation between Ultralatin and Profunds-large is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ultralatin America Profund and Profunds Large Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profunds Large Cap and Ultralatin America 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 Ultralatin America Profund are associated (or correlated) with Profunds-large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profunds Large Cap has no effect on the direction of Ultralatin America i.e., Ultralatin America and Profunds-large Cap go up and down completely randomly.

Pair Corralation between Ultralatin America and Profunds-large Cap

Assuming the 90 days horizon Ultralatin America Profund is expected to under-perform the Profunds-large Cap. In addition to that, Ultralatin America is 2.45 times more volatile than Profunds Large Cap Growth. It trades about -0.08 of its total potential returns per unit of risk. Profunds Large Cap Growth is currently generating about 0.1 per unit of volatility. If you would invest  3,456  in Profunds Large Cap Growth on October 21, 2024 and sell it today you would earn a total of  139.00  from holding Profunds Large Cap Growth or generate 4.02% return on investment over 90 days.

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

Ultralatin America Profund  vs.  Profunds Large Cap Growth

Ultralatin America

Risk-Adjusted Performance

0 of 100

Very Weak

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

Profunds Large Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Profunds Large Cap Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Profunds-large Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ultralatin America and Profunds-large Cap

The main advantage of trading using opposite Ultralatin America and Profunds-large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultralatin America position performs unexpectedly, Profunds-large Cap 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 Profunds-large Cap will offset losses from the drop in Profunds-large Cap's long position.

The idea behind Ultralatin America Profund and Profunds Large Cap Growth 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.