Correlation Between Falling Dollar and Profunds Ultrashort
Can any of the company-specific risk be diversified away by investing in both Falling Dollar and Profunds Ultrashort 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 Falling Dollar and Profunds Ultrashort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falling Dollar Profund and Profunds Ultrashort Nasdaq 100, you can compare the effects of market volatilities on Falling Dollar and Profunds Ultrashort 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 Falling Dollar with a short position of Profunds Ultrashort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falling Dollar and Profunds Ultrashort.
Diversification Opportunities for Falling Dollar and Profunds Ultrashort
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Falling and Profunds is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Falling Dollar Profund and Profunds Ultrashort Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profunds Ultrashort and Falling Dollar 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 Falling Dollar Profund are associated (or correlated) with Profunds Ultrashort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profunds Ultrashort has no effect on the direction of Falling Dollar i.e., Falling Dollar and Profunds Ultrashort go up and down completely randomly.
Pair Corralation between Falling Dollar and Profunds Ultrashort
Assuming the 90 days horizon Falling Dollar Profund is expected to generate 0.23 times more return on investment than Profunds Ultrashort. However, Falling Dollar Profund is 4.4 times less risky than Profunds Ultrashort. It trades about -0.15 of its potential returns per unit of risk. Profunds Ultrashort Nasdaq 100 is currently generating about -0.12 per unit of risk. If you would invest 1,229 in Falling Dollar Profund on August 24, 2024 and sell it today you would lose (21.00) from holding Falling Dollar Profund or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falling Dollar Profund vs. Profunds Ultrashort Nasdaq 100
Performance |
| Timeline |
| Falling Dollar Profund |
| Profunds Ultrashort |
Falling Dollar and Profunds Ultrashort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falling Dollar and Profunds Ultrashort
The main advantage of trading using opposite Falling Dollar and Profunds Ultrashort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falling Dollar position performs unexpectedly, Profunds Ultrashort 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 Ultrashort will offset losses from the drop in Profunds Ultrashort's long position.| Falling Dollar vs. Short Real Estate | Falling Dollar vs. HUMANA INC | Falling Dollar vs. Aquagold International | Falling Dollar vs. Barloworld Ltd ADR |
| Profunds Ultrashort vs. Old Westbury Short Term | Profunds Ultrashort vs. Extended Market Index | Profunds Ultrashort vs. Semiconductor Ultrasector Profund | Profunds Ultrashort vs. Pnc Emerging Markets |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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