Correlation Between Elfun Government and Ultrasmall-cap Profund

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Can any of the company-specific risk be diversified away by investing in both Elfun Government and Ultrasmall-cap Profund 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 Elfun Government and Ultrasmall-cap Profund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elfun Government Money and Ultrasmall Cap Profund Ultrasmall Cap, you can compare the effects of market volatilities on Elfun Government and Ultrasmall-cap Profund 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 Elfun Government with a short position of Ultrasmall-cap Profund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elfun Government and Ultrasmall-cap Profund.

Diversification Opportunities for Elfun Government and Ultrasmall-cap Profund

ElfunUltrasmall-capDiversified AwayElfunUltrasmall-capDiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Elfun and Ultrasmall-cap is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Elfun Government Money and Ultrasmall Cap Profund Ultrasm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrasmall Cap Profund and Elfun Government 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 Elfun Government Money are associated (or correlated) with Ultrasmall-cap Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrasmall Cap Profund has no effect on the direction of Elfun Government i.e., Elfun Government and Ultrasmall-cap Profund go up and down completely randomly.

Pair Corralation between Elfun Government and Ultrasmall-cap Profund

Assuming the 90 days horizon Elfun Government Money is expected to generate 7.65 times more return on investment than Ultrasmall-cap Profund. However, Elfun Government is 7.65 times more volatile than Ultrasmall Cap Profund Ultrasmall Cap. It trades about 0.03 of its potential returns per unit of risk. Ultrasmall Cap Profund Ultrasmall Cap is currently generating about 0.03 per unit of risk. If you would invest  394.00  in Elfun Government Money on November 19, 2024 and sell it today you would lose (294.00) from holding Elfun Government Money or give up 74.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy99.4%
ValuesDaily Returns

Elfun Government Money  vs.  Ultrasmall Cap Profund Ultrasm

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-50
JavaScript chart by amCharts 3.21.15ELMXX UAPIX
       Timeline  
Elfun Government Money 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Elfun Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Elfun Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.05
Ultrasmall Cap Profund 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Ultrasmall Cap Profund Ultrasmall Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Ultrasmall-cap Profund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb646668707274767880

Elfun Government and Ultrasmall-cap Profund Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15 0.020.040.060.08
JavaScript chart by amCharts 3.21.15ELMXX UAPIX
       Returns  

Pair Trading with Elfun Government and Ultrasmall-cap Profund

The main advantage of trading using opposite Elfun Government and Ultrasmall-cap Profund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elfun Government position performs unexpectedly, Ultrasmall-cap Profund 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 Ultrasmall-cap Profund will offset losses from the drop in Ultrasmall-cap Profund's long position.
The idea behind Elfun Government Money and Ultrasmall Cap Profund Ultrasmall Cap 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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