Correlation Between Equity Growth and Ultra Fund
Can any of the company-specific risk be diversified away by investing in both Equity Growth and Ultra Fund 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 Equity Growth and Ultra Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Growth Fund and Ultra Fund C, you can compare the effects of market volatilities on Equity Growth and Ultra Fund 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 Equity Growth with a short position of Ultra Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Growth and Ultra Fund.
Diversification Opportunities for Equity Growth and Ultra Fund
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Equity and Ultra is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Equity Growth Fund and Ultra Fund C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Fund C and Equity Growth 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 Equity Growth Fund are associated (or correlated) with Ultra Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Fund C has no effect on the direction of Equity Growth i.e., Equity Growth and Ultra Fund go up and down completely randomly.
Pair Corralation between Equity Growth and Ultra Fund
Assuming the 90 days horizon Equity Growth Fund is expected to generate 0.76 times more return on investment than Ultra Fund. However, Equity Growth Fund is 1.32 times less risky than Ultra Fund. It trades about 0.06 of its potential returns per unit of risk. Ultra Fund C is currently generating about 0.02 per unit of risk. If you would invest 3,360 in Equity Growth Fund on October 20, 2024 and sell it today you would earn a total of 37.00 from holding Equity Growth Fund or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Growth Fund vs. Ultra Fund C
Performance |
| Timeline |
| Equity Growth |
| Ultra Fund C |
Equity Growth and Ultra Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Growth and Ultra Fund
The main advantage of trading using opposite Equity Growth and Ultra Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Growth position performs unexpectedly, Ultra Fund 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 Ultra Fund will offset losses from the drop in Ultra Fund's long position.| Equity Growth vs. Tiaa Cref Lifestyle Moderate | Equity Growth vs. Tiaa Cref Lifestyle Moderate | Equity Growth vs. Blackrock Moderate Prepared | Equity Growth vs. Moderately Aggressive Balanced |
| Ultra Fund vs. Ultra Fund R6 | Ultra Fund vs. Select Fund C | Ultra Fund vs. Ultra Fund R | Ultra Fund vs. Select Fund R |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |