Correlation Between Pace High and Ultra Fund
Can any of the company-specific risk be diversified away by investing in both Pace High 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 Pace High and Ultra Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace High Yield and Ultra Fund A, you can compare the effects of market volatilities on Pace High 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 Pace High with a short position of Ultra Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Ultra Fund.
Diversification Opportunities for Pace High and Ultra Fund
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pace and Ultra is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Ultra Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Fund A and Pace High 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 Pace High Yield 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 A has no effect on the direction of Pace High i.e., Pace High and Ultra Fund go up and down completely randomly.
Pair Corralation between Pace High and Ultra Fund
Assuming the 90 days horizon Pace High is expected to generate 2.11 times less return on investment than Ultra Fund. But when comparing it to its historical volatility, Pace High Yield is 7.67 times less risky than Ultra Fund. It trades about 0.22 of its potential returns per unit of risk. Ultra Fund A is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 7,470 in Ultra Fund A on October 22, 2024 and sell it today you would earn a total of 1,194 from holding Ultra Fund A or generate 15.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. Ultra Fund A
Performance |
| Timeline |
| Pace High Yield |
| Ultra Fund A |
Pace High and Ultra Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Ultra Fund
The main advantage of trading using opposite Pace High and Ultra Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High 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.| Pace High vs. Transamerica High Yield | Pace High vs. Ab High Income | Pace High vs. Artisan High Income | Pace High vs. Ab High Income |
| Ultra Fund vs. Ultra Fund C | Ultra Fund vs. Ultra Fund Investor | Ultra Fund vs. Ultra Short Term Bond | Ultra Fund vs. Ultra Short Fixed Income |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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