Correlation Between Profunds Ultrashort and Braddock Multi-strategy

Can any of the company-specific risk be diversified away by investing in both Profunds Ultrashort and Braddock Multi-strategy 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 Braddock Multi-strategy 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 Braddock Multi Strategy Income, you can compare the effects of market volatilities on Profunds Ultrashort and Braddock Multi-strategy 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 Braddock Multi-strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds Ultrashort and Braddock Multi-strategy.

Diversification Opportunities for Profunds Ultrashort and Braddock Multi-strategy

0.63

Correlation Coefficient

Profunds Ultrashort  Braddock Multi-strategy

Poor diversification

The 3 months correlation between Profunds and Braddock is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Braddock Multi Strategy Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braddock Multi Strategy 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 Braddock Multi-strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braddock Multi Strategy has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Braddock Multi-strategy go up and down completely randomly.

Pair Corralation between Profunds Ultrashort and Braddock Multi-strategy

Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to generate 18.18 times more return on investment than Braddock Multi-strategy. However, Profunds Ultrashort is 18.18 times more volatile than Braddock Multi Strategy Income. It trades about 0.12 of its potential returns per unit of risk. Braddock Multi Strategy Income is currently generating about 0.22 per unit of risk. If you would invest  2,478  in Profunds Ultrashort Nasdaq 100 on December 30, 2024 and sell it today you would earn a total of  485.00  from holding Profunds Ultrashort Nasdaq 100 or generate 19.57% return on investment over 90 days.

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

Profunds Ultrashort Nasdaq 100  vs.  Braddock Multi Strategy Income

Profunds Ultrashort

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Profunds Ultrashort Nasdaq 100 are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Profunds Ultrashort showed solid returns over the last few months and may actually be approaching a breakup point.

Braddock Multi Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Braddock Multi Strategy Income are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Braddock Multi-strategy 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 Braddock Multi-strategy

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

The idea behind Profunds Ultrashort Nasdaq 100 and Braddock Multi Strategy Income 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.