Correlation Between Dow 2x and Ultramid Cap
Can any of the company-specific risk be diversified away by investing in both Dow 2x and Ultramid 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 Dow 2x and Ultramid Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow 2x Strategy and Ultramid Cap Profund Ultramid Cap, you can compare the effects of market volatilities on Dow 2x and Ultramid 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 Dow 2x with a short position of Ultramid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow 2x and Ultramid Cap.
Diversification Opportunities for Dow 2x and Ultramid Cap
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between DOW and Ultramid is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dow 2x Strategy and Ultramid Cap Profund Ultramid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultramid Cap Profund and Dow 2x 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 Dow 2x Strategy are associated (or correlated) with Ultramid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultramid Cap Profund has no effect on the direction of Dow 2x i.e., Dow 2x and Ultramid Cap go up and down completely randomly.
Pair Corralation between Dow 2x and Ultramid Cap
Assuming the 90 days horizon Dow 2x Strategy is expected to generate 0.79 times more return on investment than Ultramid Cap. However, Dow 2x Strategy is 1.27 times less risky than Ultramid Cap. It trades about 0.07 of its potential returns per unit of risk. Ultramid Cap Profund Ultramid Cap is currently generating about 0.04 per unit of risk. If you would invest 13,378 in Dow 2x Strategy on October 26, 2024 and sell it today you would earn a total of 1,787 from holding Dow 2x Strategy or generate 13.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow 2x Strategy vs. Ultramid Cap Profund Ultramid
Performance |
| Timeline |
| Dow 2x Strategy |
| Ultramid Cap Profund |
Dow 2x and Ultramid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dow 2x and Ultramid Cap
The main advantage of trading using opposite Dow 2x and Ultramid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow 2x position performs unexpectedly, Ultramid 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 Ultramid Cap will offset losses from the drop in Ultramid Cap's long position.| Dow 2x vs. Dow 2x Strategy | Dow 2x vs. Dow 2x Strategy | Dow 2x vs. Nasdaq 100 2x Strategy | Dow 2x vs. Ultramid Cap Profund Ultramid Cap |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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