Correlation Between Ultrashort Emerging and Stocksplus

Can any of the company-specific risk be diversified away by investing in both Ultrashort Emerging and Stocksplus 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 Ultrashort Emerging and Stocksplus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ultrashort Emerging Markets and Stocksplus Tr Short, you can compare the effects of market volatilities on Ultrashort Emerging and Stocksplus 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 Ultrashort Emerging with a short position of Stocksplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultrashort Emerging and Stocksplus.

Diversification Opportunities for Ultrashort Emerging and Stocksplus

-0.4

Correlation Coefficient

Ultrashort Emerging  Stocksplus

Very good diversification

The 3 months correlation between Ultrashort and Stocksplus is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ultrashort Emerging Markets and Stocksplus Tr Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stocksplus Tr Short and Ultrashort Emerging 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 Ultrashort Emerging Markets are associated (or correlated) with Stocksplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stocksplus Tr Short has no effect on the direction of Ultrashort Emerging i.e., Ultrashort Emerging and Stocksplus go up and down completely randomly.

Pair Corralation between Ultrashort Emerging and Stocksplus

Assuming the 90 days horizon Ultrashort Emerging Markets is expected to under-perform the Stocksplus. In addition to that, Ultrashort Emerging is 3.09 times more volatile than Stocksplus Tr Short. It trades about -0.09 of its total potential returns per unit of risk. Stocksplus Tr Short is currently generating about 0.16 per unit of volatility. If you would invest  695.00  in Stocksplus Tr Short on December 26, 2024 and sell it today you would earn a total of  65.00  from holding Stocksplus Tr Short or generate 9.35% return on investment over 90 days.

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

Ultrashort Emerging Markets  vs.  Stocksplus Tr Short

Ultrashort Emerging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultrashort Emerging Markets 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.

Stocksplus Tr Short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stocksplus Tr Short are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Stocksplus may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ultrashort Emerging and Stocksplus

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

The idea behind Ultrashort Emerging Markets and Stocksplus Tr Short 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .