Correlation Between Profunds Ultrashort and Sprucegrove International

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

Diversification Opportunities for Profunds Ultrashort and Sprucegrove International

0.66

Correlation Coefficient

Profunds Ultrashort  Sprucegrove International

Poor diversification

The 3 months correlation between Profunds and Sprucegrove is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Sprucegrove International Equi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprucegrove International 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 Sprucegrove International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprucegrove International has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Sprucegrove International go up and down completely randomly.

Pair Corralation between Profunds Ultrashort and Sprucegrove International

Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to under-perform the Sprucegrove International. In addition to that, Profunds Ultrashort is 2.56 times more volatile than Sprucegrove International Equity. It trades about -0.2 of its total potential returns per unit of risk. Sprucegrove International Equity is currently generating about -0.1 per unit of volatility. If you would invest  7,358  in Sprucegrove International Equity on September 18, 2024 and sell it today you would lose (366.00) from holding Sprucegrove International Equity or give up 4.97% of portfolio value over 90 days.

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

Profunds Ultrashort Nasdaq 100  vs.  Sprucegrove International Equi

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 weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Sprucegrove International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprucegrove International Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Sprucegrove International 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 Sprucegrove International

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

The idea behind Profunds Ultrashort Nasdaq 100 and Sprucegrove International Equity 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.