Correlation Between Ultramid Cap and Intrepid Endurance

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

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

Diversification Opportunities for Ultramid Cap and Intrepid Endurance

-0.2

Correlation Coefficient

Ultramid Cap  Intrepid Endurance

Good diversification

The 3 months correlation between Ultramid and Intrepid is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ultramid Cap Profund Ultramid and Intrepid Endurance Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrepid Endurance and Ultramid Cap 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 Ultramid Cap Profund Ultramid Cap are associated (or correlated) with Intrepid Endurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrepid Endurance has no effect on the direction of Ultramid Cap i.e., Ultramid Cap and Intrepid Endurance go up and down completely randomly.

Pair Corralation between Ultramid Cap and Intrepid Endurance

Assuming the 90 days horizon Ultramid Cap Profund Ultramid Cap is expected to generate 2.2 times more return on investment than Intrepid Endurance. However, Ultramid Cap is 2.2 times more volatile than Intrepid Endurance Fund. It trades about -0.05 of its potential returns per unit of risk. Intrepid Endurance Fund is currently generating about -0.12 per unit of risk. If you would invest  5,932  in Ultramid Cap Profund Ultramid Cap on September 12, 2024 and sell it today you would lose (149.00) from holding Ultramid Cap Profund Ultramid Cap or give up 2.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	57.14%
Values	Daily Returns

Ultramid Cap Profund Ultramid   vs.  Intrepid Endurance Fund

Ultramid Cap Profund

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ultramid Cap Profund Ultramid Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ultramid Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Intrepid Endurance

Risk-Adjusted Performance

0 of 100

Insignificant

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

Pair Trading with Ultramid Cap and Intrepid Endurance

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

The idea behind Ultramid Cap Profund Ultramid Cap and Intrepid Endurance Fund 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.