Correlation Between Profunds Ultrashort and Cambiar Opportunity

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

Diversification Opportunities for Profunds Ultrashort and Cambiar Opportunity

-0.92

Correlation Coefficient

Profunds Ultrashort  Cambiar Opportunity

Pay attention - limited upside

The 3 months correlation between Profunds and Cambiar is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Cambiar Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Opportunity 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 Cambiar Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Opportunity has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Cambiar Opportunity go up and down completely randomly.

Pair Corralation between Profunds Ultrashort and Cambiar Opportunity

Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to under-perform the Cambiar Opportunity. In addition to that, Profunds Ultrashort is 2.73 times more volatile than Cambiar Opportunity Fund. It trades about -0.26 of its total potential returns per unit of risk. Cambiar Opportunity Fund is currently generating about 0.28 per unit of volatility. If you would invest  2,981  in Cambiar Opportunity Fund on September 4, 2024 and sell it today you would earn a total of  130.00  from holding Cambiar Opportunity Fund or generate 4.36% return on investment over 90 days.

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

Profunds Ultrashort Nasdaq 100  vs.  Cambiar Opportunity Fund

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 basic 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.

Cambiar Opportunity

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cambiar Opportunity Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cambiar Opportunity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Profunds Ultrashort and Cambiar Opportunity

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

The idea behind Profunds Ultrashort Nasdaq 100 and Cambiar Opportunity Fund 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 Transaction History module to view history of all your transactions and understand their impact on performance.