Correlation Between Ultra Fund and Value Fund
Can any of the company-specific risk be diversified away by investing in both Ultra Fund and Value 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 Ultra Fund and Value Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Fund C and Value Fund I, you can compare the effects of market volatilities on Ultra Fund and Value 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 Ultra Fund with a short position of Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Fund and Value Fund.
Diversification Opportunities for Ultra Fund and Value Fund
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ultra and Value is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Fund C and Value Fund I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund I and Ultra Fund 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 Ultra Fund C are associated (or correlated) with Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund I has no effect on the direction of Ultra Fund i.e., Ultra Fund and Value Fund go up and down completely randomly.
Pair Corralation between Ultra Fund and Value Fund
Assuming the 90 days horizon Ultra Fund C is expected to generate 1.63 times more return on investment than Value Fund. However, Ultra Fund is 1.63 times more volatile than Value Fund I. It trades about 0.07 of its potential returns per unit of risk. Value Fund I is currently generating about 0.07 per unit of risk. If you would invest 5,023 in Ultra Fund C on September 2, 2024 and sell it today you would earn a total of 1,550 from holding Ultra Fund C or generate 30.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Fund C vs. Value Fund I
Performance |
| Timeline |
| Ultra Fund C |
| Value Fund I |
Ultra Fund and Value Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Fund and Value Fund
The main advantage of trading using opposite Ultra Fund and Value Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Fund position performs unexpectedly, Value 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 Value Fund will offset losses from the drop in Value Fund's long position.| Ultra Fund vs. Ultra Fund R6 | Ultra Fund vs. Select Fund C | Ultra Fund vs. Ultra Fund R | Ultra Fund vs. Select Fund R |
| Value Fund vs. International Investors Gold | Value Fund vs. Goldman Sachs Esg | Value Fund vs. James Balanced Golden | Value Fund vs. Gamco Global Gold |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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