Correlation Between Bear Profund and Ultrashort Small

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

Diversification Opportunities for Bear Profund and Ultrashort Small

0.92

Correlation Coefficient

Bear Profund  Ultrashort Small

Almost no diversification

The 3 months correlation between Bear and Ultrashort is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Bear Profund Bear and Ultrashort Small Cap Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrashort Small Cap 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 Ultrashort Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrashort Small Cap has no effect on the direction of Bear Profund i.e., Bear Profund and Ultrashort Small go up and down completely randomly.

Pair Corralation between Bear Profund and Ultrashort Small

Assuming the 90 days horizon Bear Profund Bear is expected to under-perform the Ultrashort Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Bear Profund Bear is 3.54 times less risky than Ultrashort Small. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Ultrashort Small Cap Profund is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,910  in Ultrashort Small Cap Profund on September 22, 2024 and sell it today you would lose (56.00) from holding Ultrashort Small Cap Profund or give up 1.14% of portfolio value over 90 days.

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

Bear Profund Bear  vs.  Ultrashort Small Cap Profund

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 fairly strong forward indicators, Bear Profund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ultrashort Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultrashort Small Cap Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Ultrashort Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bear Profund and Ultrashort Small

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

The idea behind Bear Profund Bear and Ultrashort Small Cap Profund 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.