Correlation Between Income Growth and Ultra Fund
Can any of the company-specific risk be diversified away by investing in both Income 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 Income 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 Income Growth Fund and Ultra Fund I, you can compare the effects of market volatilities on Income 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 Income Growth with a short position of Ultra Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and Ultra Fund.
Diversification Opportunities for Income Growth and Ultra Fund
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Income and Ultra is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth Fund and Ultra Fund I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Fund I and Income 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 Income 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 I has no effect on the direction of Income Growth i.e., Income Growth and Ultra Fund go up and down completely randomly.
Pair Corralation between Income Growth and Ultra Fund
Assuming the 90 days horizon Income Growth is expected to generate 1.27 times less return on investment than Ultra Fund. But when comparing it to its historical volatility, Income Growth Fund is 1.59 times less risky than Ultra Fund. It trades about 0.1 of its potential returns per unit of risk. Ultra Fund I is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 8,627 in Ultra Fund I on August 27, 2024 and sell it today you would earn a total of 1,536 from holding Ultra Fund I or generate 17.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Growth Fund vs. Ultra Fund I
Performance |
| Timeline |
| Income Growth |
| Ultra Fund I |
Income Growth and Ultra Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Growth and Ultra Fund
The main advantage of trading using opposite Income Growth and Ultra Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income 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.| Income Growth vs. Ultra Fund I | Income Growth vs. Value Fund I | Income Growth vs. Equity Growth Fund | Income Growth vs. International Growth Fund |
| Ultra Fund vs. Ultra Fund A | Ultra Fund vs. Select Fund I | Ultra Fund vs. Value Fund I | Ultra Fund vs. Income Growth Fund |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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