Correlation Between Profunds Ultrashort and Kennedy Capital
Can any of the company-specific risk be diversified away by investing in both Profunds Ultrashort and Kennedy Capital 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 Kennedy Capital 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 Kennedy Capital Small, you can compare the effects of market volatilities on Profunds Ultrashort and Kennedy Capital 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 Kennedy Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds Ultrashort and Kennedy Capital.
Diversification Opportunities for Profunds Ultrashort and Kennedy Capital
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Profunds and Kennedy is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Kennedy Capital Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kennedy Capital Small 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 Kennedy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kennedy Capital Small has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Kennedy Capital go up and down completely randomly.
Pair Corralation between Profunds Ultrashort and Kennedy Capital
Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to under-perform the Kennedy Capital. In addition to that, Profunds Ultrashort is 1.43 times more volatile than Kennedy Capital Small. It trades about -0.08 of its total potential returns per unit of risk. Kennedy Capital Small is currently generating about -0.03 per unit of volatility. If you would invest 1,258 in Kennedy Capital Small on September 22, 2024 and sell it today you would lose (48.00) from holding Kennedy Capital Small or give up 3.82% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Profunds Ultrashort Nasdaq 100 vs. Kennedy Capital Small
Performance |
Timeline |
Profunds Ultrashort |
Kennedy Capital Small |
Profunds Ultrashort and Kennedy Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Profunds Ultrashort and Kennedy Capital
The main advantage of trading using opposite Profunds Ultrashort and Kennedy Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profunds Ultrashort position performs unexpectedly, Kennedy Capital 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 Kennedy Capital will offset losses from the drop in Kennedy Capital's long position.Profunds Ultrashort vs. Short Real Estate | Profunds Ultrashort vs. Short Real Estate | Profunds Ultrashort vs. Technology Ultrasector Profund | Profunds Ultrashort vs. Technology Ultrasector Profund |
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Check out your portfolio center.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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