Correlation Between Bear Profund and Small-cap Profund

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

By analyzing existing cross correlation between Bear Profund Bear and Small Cap Profund Small Cap, you can compare the effects of market volatilities on Bear Profund and Small-cap Profund 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 Bear Profund with a short position of Small-cap Profund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bear Profund and Small-cap Profund.

Diversification Opportunities for Bear Profund and Small-cap Profund

-0.87

Correlation Coefficient

Bear Profund  Small-cap Profund

Pay attention - limited upside

The 3 months correlation between Bear and Small-cap is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bear Profund Bear and Small Cap Profund Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Profund and Bear Profund 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 Bear Profund Bear are associated (or correlated) with Small-cap Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Profund has no effect on the direction of Bear Profund i.e., Bear Profund and Small-cap Profund go up and down completely randomly.

Pair Corralation between Bear Profund and Small-cap Profund

Assuming the 90 days horizon Bear Profund Bear is expected to under-perform the Small-cap Profund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Bear Profund Bear is 1.98 times less risky than Small-cap Profund. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Small Cap Profund Small Cap is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  11,259  in Small Cap Profund Small Cap on September 5, 2024 and sell it today you would earn a total of  1,173  from holding Small Cap Profund Small Cap or generate 10.42% return on investment over 90 days.

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

Bear Profund Bear  vs.  Small Cap Profund Small Cap

Bear Profund Bear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bear Profund Bear 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.

Small Cap Profund

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Bear Profund and Small-cap Profund

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

The idea behind Bear Profund Bear and Small Cap Profund Small Cap 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.