Correlation Between Profunds Ultrashort and Professionally Managed

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

Diversification Opportunities for Profunds Ultrashort and Professionally Managed

-0.75

Correlation Coefficient

Profunds Ultrashort  Professionally Managed

Pay attention - limited upside

The 3 months correlation between Profunds and Professionally is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Professionally Managed Portfol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Professionally Managed 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 Professionally Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Professionally Managed has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Professionally Managed go up and down completely randomly.

Pair Corralation between Profunds Ultrashort and Professionally Managed

Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to generate 2.25 times more return on investment than Professionally Managed. However, Profunds Ultrashort is 2.25 times more volatile than Professionally Managed Portfolios. It trades about 0.13 of its potential returns per unit of risk. Professionally Managed Portfolios is currently generating about -0.3 per unit of risk. If you would invest  2,185  in Profunds Ultrashort Nasdaq 100 on December 24, 2024 and sell it today you would earn a total of  446.00  from holding Profunds Ultrashort Nasdaq 100 or generate 20.41% 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.  Professionally Managed Portfol

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 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Profunds Ultrashort showed solid returns over the last few months and may actually be approaching a breakup point.

Professionally Managed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Professionally Managed Portfolios 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Profunds Ultrashort and Professionally Managed

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

The idea behind Profunds Ultrashort Nasdaq 100 and Professionally Managed Portfolios 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.