Correlation Between Profunds Ultrashort and Bridge Builder

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

Diversification Opportunities for Profunds Ultrashort and Bridge Builder

-0.97

Correlation Coefficient

Profunds Ultrashort  Bridge Builder

Pay attention - limited upside

The 3 months correlation between Profunds and Bridge is -0.97. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Bridge Builder Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Builder Trust 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 Bridge Builder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Builder Trust has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Bridge Builder go up and down completely randomly.

Pair Corralation between Profunds Ultrashort and Bridge Builder

Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to under-perform the Bridge Builder. In addition to that, Profunds Ultrashort is 2.93 times more volatile than Bridge Builder Trust. It trades about -0.14 of its total potential returns per unit of risk. Bridge Builder Trust is currently generating about 0.2 per unit of volatility. If you would invest  1,411  in Bridge Builder Trust on September 12, 2024 and sell it today you would earn a total of  116.00  from holding Bridge Builder Trust or generate 8.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Profunds Ultrashort Nasdaq 100  vs.  Bridge Builder Trust

Profunds Ultrashort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Profunds Ultrashort Nasdaq 100 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 forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Bridge Builder Trust

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bridge Builder Trust are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Bridge Builder may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Profunds Ultrashort and Bridge Builder

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

The idea behind Profunds Ultrashort Nasdaq 100 and Bridge Builder Trust 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.