Correlation Between Profunds Ultrashort and Baron Durable

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

By analyzing existing cross correlation between Profunds Ultrashort Nasdaq 100 and Baron Durable Advantage, you can compare the effects of market volatilities on Profunds Ultrashort and Baron Durable 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 Profunds Ultrashort with a short position of Baron Durable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds Ultrashort and Baron Durable.

Diversification Opportunities for Profunds Ultrashort and Baron Durable

-0.84

Correlation Coefficient

Profunds Ultrashort  Baron Durable

Pay attention - limited upside

The 3 months correlation between Profunds and Baron is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Baron Durable Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Durable Advantage and Profunds Ultrashort 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 Profunds Ultrashort Nasdaq 100 are associated (or correlated) with Baron Durable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Durable Advantage has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Baron Durable go up and down completely randomly.

Pair Corralation between Profunds Ultrashort and Baron Durable

Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to under-perform the Baron Durable. In addition to that, Profunds Ultrashort is 2.29 times more volatile than Baron Durable Advantage. It trades about -0.09 of its total potential returns per unit of risk. Baron Durable Advantage is currently generating about 0.12 per unit of volatility. If you would invest  1,649  in Baron Durable Advantage on December 1, 2024 and sell it today you would earn a total of  1,215  from holding Baron Durable Advantage or generate 73.68% return on investment over 90 days.

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

Profunds Ultrashort Nasdaq 100  vs.  Baron Durable Advantage

Profunds Ultrashort

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Profunds Ultrashort Nasdaq 100 are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Profunds Ultrashort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baron Durable Advantage

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Profunds Ultrashort and Baron Durable

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

The idea behind Profunds Ultrashort Nasdaq 100 and Baron Durable Advantage 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.