Correlation Between Profunds Ultrashort and Pacific Funds

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

Diversification Opportunities for Profunds Ultrashort and Pacific Funds

-0.32

Correlation Coefficient

Profunds Ultrashort  Pacific Funds

Very good diversification

The 3 months correlation between Profunds and Pacific is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Pacific Funds Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Floating 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 Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Floating has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Pacific Funds go up and down completely randomly.

Pair Corralation between Profunds Ultrashort and Pacific Funds

Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to generate 22.71 times more return on investment than Pacific Funds. However, Profunds Ultrashort is 22.71 times more volatile than Pacific Funds Floating. It trades about 0.08 of its potential returns per unit of risk. Pacific Funds Floating is currently generating about 0.03 per unit of risk. If you would invest  2,255  in Profunds Ultrashort Nasdaq 100 on December 4, 2024 and sell it today you would earn a total of  228.00  from holding Profunds Ultrashort Nasdaq 100 or generate 10.11% return on investment over 90 days.

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

Profunds Ultrashort Nasdaq 100  vs.  Pacific Funds Floating

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 basic indicators, Profunds Ultrashort may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pacific Funds Floating

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Funds Floating are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pacific Funds 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 Pacific Funds

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

The idea behind Profunds Ultrashort Nasdaq 100 and Pacific Funds Floating 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.