Correlation Between Profunds Ultrashort and Greenspring Fund

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

Diversification Opportunities for Profunds Ultrashort and Greenspring Fund

-0.61

Correlation Coefficient

Profunds Ultrashort  Greenspring Fund

Excellent diversification

The 3 months correlation between Profunds and Greenspring is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Greenspring Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenspring Fund Retail 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 Greenspring Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenspring Fund Retail has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Greenspring Fund go up and down completely randomly.

Pair Corralation between Profunds Ultrashort and Greenspring Fund

Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to generate 2.94 times more return on investment than Greenspring Fund. However, Profunds Ultrashort is 2.94 times more volatile than Greenspring Fund Retail. It trades about 0.17 of its potential returns per unit of risk. Greenspring Fund Retail is currently generating about -0.24 per unit of risk. If you would invest  2,459  in Profunds Ultrashort Nasdaq 100 on December 5, 2024 and sell it today you would earn a total of  210.00  from holding Profunds Ultrashort Nasdaq 100 or generate 8.54% return on investment over 90 days.

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

Profunds Ultrashort Nasdaq 100  vs.  Greenspring Fund Retail

Profunds Ultrashort

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Profunds Ultrashort Nasdaq 100 are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Profunds Ultrashort may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Greenspring Fund Retail

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Profunds Ultrashort and Greenspring Fund

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

The idea behind Profunds Ultrashort Nasdaq 100 and Greenspring Fund Retail 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.