Correlation Between Ultrashort Japan and Bull Profund

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

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

Diversification Opportunities for Ultrashort Japan and Bull Profund

-0.63

Correlation Coefficient

Ultrashort Japan  Bull Profund

Excellent diversification

The 3 months correlation between Ultrashort and Bull is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ultrashort Japan 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 Ultrashort Japan 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 Ultrashort Japan 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 Ultrashort Japan i.e., Ultrashort Japan and Bull Profund go up and down completely randomly.

Pair Corralation between Ultrashort Japan and Bull Profund

Assuming the 90 days horizon Ultrashort Japan Profund is expected to under-perform the Bull Profund. In addition to that, Ultrashort Japan is 4.28 times more volatile than Bull Profund Bull. It trades about -0.09 of its total potential returns per unit of risk. Bull Profund Bull is currently generating about 0.17 per unit of volatility. If you would invest  5,327  in Bull Profund Bull on September 17, 2024 and sell it today you would earn a total of  391.00  from holding Bull Profund Bull or generate 7.34% return on investment over 90 days.

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

Ultrashort Japan Profund  vs.  Bull Profund Bull

Ultrashort Japan Profund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultrashort Japan 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 January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Bull Profund Bull

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bull Profund Bull are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Bull Profund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ultrashort Japan and Bull Profund

The main advantage of trading using opposite Ultrashort Japan and Bull Profund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultrashort Japan 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 Ultrashort Japan 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.