Correlation Between Ultrabull Profund and Basic Materials

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

By analyzing existing cross correlation between Ultrabull Profund Ultrabull and Basic Materials Ultrasector, you can compare the effects of market volatilities on Ultrabull Profund and Basic Materials 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 Ultrabull Profund with a short position of Basic Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultrabull Profund and Basic Materials.

Diversification Opportunities for Ultrabull Profund and Basic Materials

-0.4

Correlation Coefficient

Ultrabull Profund  Basic Materials

Very good diversification

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

Pair Corralation between Ultrabull Profund and Basic Materials

Assuming the 90 days horizon Ultrabull Profund Ultrabull is expected to generate 1.11 times more return on investment than Basic Materials. However, Ultrabull Profund is 1.11 times more volatile than Basic Materials Ultrasector. It trades about 0.11 of its potential returns per unit of risk. Basic Materials Ultrasector is currently generating about 0.03 per unit of risk. If you would invest  5,091  in Ultrabull Profund Ultrabull on September 17, 2024 and sell it today you would earn a total of  5,936  from holding Ultrabull Profund Ultrabull or generate 116.6% return on investment over 90 days.

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

Ultrabull Profund Ultrabull  vs.  Basic Materials Ultrasector

Ultrabull Profund

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ultrabull Profund Ultrabull are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ultrabull Profund showed solid returns over the last few months and may actually be approaching a breakup point.

Basic Materials Ultr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Basic Materials Ultrasector 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.

Pair Trading with Ultrabull Profund and Basic Materials

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

The idea behind Ultrabull Profund Ultrabull and Basic Materials Ultrasector 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.