Correlation Between Ultra Fund and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Ultra Fund and Emerging Markets 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 Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Fund Investor and Emerging Markets Fund, you can compare the effects of market volatilities on Ultra Fund and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Fund and Emerging Markets.
Diversification Opportunities for Ultra Fund and Emerging Markets
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ultra and Emerging is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Fund Investor and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets 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 Investor are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Ultra Fund i.e., Ultra Fund and Emerging Markets go up and down completely randomly.
Pair Corralation between Ultra Fund and Emerging Markets
Assuming the 90 days horizon Ultra Fund Investor is expected to generate 1.46 times more return on investment than Emerging Markets. However, Ultra Fund is 1.46 times more volatile than Emerging Markets Fund. It trades about 0.07 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about -0.01 per unit of risk. If you would invest 9,111 in Ultra Fund Investor on November 2, 2024 and sell it today you would earn a total of 438.00 from holding Ultra Fund Investor or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Fund Investor vs. Emerging Markets Fund
Performance |
| Timeline |
| Ultra Fund Investor |
| Emerging Markets |
Ultra Fund and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Fund and Emerging Markets
The main advantage of trading using opposite Ultra Fund and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Fund position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Ultra Fund vs. Growth Fund Investor | Ultra Fund vs. Select Fund Investor | Ultra Fund vs. International Growth Fund | Ultra Fund vs. Heritage Fund Investor |
| Emerging Markets vs. Heritage Fund Investor | Emerging Markets vs. Real Estate Fund | Emerging Markets vs. Global Growth Fund | Emerging Markets vs. Utilities Fund Investor |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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