Correlation Between Profunds Ultrashort and Nuveen Floating

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

Diversification Opportunities for Profunds Ultrashort and Nuveen Floating

-0.7

Correlation Coefficient

Profunds Ultrashort  Nuveen Floating

Excellent diversification

The 3 months correlation between Profunds and Nuveen is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Nuveen Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Floating Rate 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 Nuveen Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Floating Rate has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Nuveen Floating go up and down completely randomly.

Pair Corralation between Profunds Ultrashort and Nuveen Floating

Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to under-perform the Nuveen Floating. In addition to that, Profunds Ultrashort is 3.27 times more volatile than Nuveen Floating Rate. It trades about -0.08 of its total potential returns per unit of risk. Nuveen Floating Rate is currently generating about 0.03 per unit of volatility. If you would invest  855.00  in Nuveen Floating Rate on October 23, 2024 and sell it today you would earn a total of  8.00  from holding Nuveen Floating Rate or generate 0.94% 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.  Nuveen Floating Rate

Profunds Ultrashort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Profunds Ultrashort Nasdaq 100 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Nuveen Floating Rate

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Floating Rate are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable technical and fundamental indicators, Nuveen Floating is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Profunds Ultrashort and Nuveen Floating

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

The idea behind Profunds Ultrashort Nasdaq 100 and Nuveen Floating Rate 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.