Correlation Between Bear Profund and Profunds-large Cap
Can any of the company-specific risk be diversified away by investing in both Bear Profund and Profunds-large Cap 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 Bear Profund and Profunds-large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bear Profund Bear and Profunds Large Cap Growth, you can compare the effects of market volatilities on Bear Profund and Profunds-large Cap 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 Bear Profund with a short position of Profunds-large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bear Profund and Profunds-large Cap.
Diversification Opportunities for Bear Profund and Profunds-large Cap
-0.99 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bear and Profunds-large is -0.99. Overlapping area represents the amount of risk that can be diversified away by holding Bear Profund Bear and Profunds Large Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profunds Large Cap and Bear Profund 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 Bear Profund Bear are associated (or correlated) with Profunds-large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profunds Large Cap has no effect on the direction of Bear Profund i.e., Bear Profund and Profunds-large Cap go up and down completely randomly.
Pair Corralation between Bear Profund and Profunds-large Cap
Assuming the 90 days horizon Bear Profund Bear is expected to under-perform the Profunds-large Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Bear Profund Bear is 1.24 times less risky than Profunds-large Cap. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Profunds Large Cap Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,294 in Profunds Large Cap Growth on August 30, 2024 and sell it today you would earn a total of 1,173 from holding Profunds Large Cap Growth or generate 51.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bear Profund Bear vs. Profunds Large Cap Growth
Performance |
| Timeline |
| Bear Profund Bear |
| Profunds Large Cap |
Bear Profund and Profunds-large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bear Profund and Profunds-large Cap
The main advantage of trading using opposite Bear Profund and Profunds-large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bear Profund position performs unexpectedly, Profunds-large Cap 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 Profunds-large Cap will offset losses from the drop in Profunds-large Cap's long position.| Bear Profund vs. Short Real Estate | Bear Profund vs. Short Real Estate | Bear Profund vs. Ultrashort Mid Cap Profund | Bear Profund vs. Ultrashort Mid Cap Profund |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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