Correlation Between Growth Fund and Ultra Fund
Can any of the company-specific risk be diversified away by investing in both Growth Fund 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 Growth Fund and Ultra Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund I and Ultra Fund C, you can compare the effects of market volatilities on Growth Fund 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 Growth Fund with a short position of Ultra Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Ultra Fund.
Diversification Opportunities for Growth Fund and Ultra Fund
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Growth and Ultra is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund I and Ultra Fund C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Fund C and Growth 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 Growth Fund I 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 C has no effect on the direction of Growth Fund i.e., Growth Fund and Ultra Fund go up and down completely randomly.
Pair Corralation between Growth Fund and Ultra Fund
Assuming the 90 days horizon Growth Fund is expected to generate 1.22 times less return on investment than Ultra Fund. But when comparing it to its historical volatility, Growth Fund I is 1.02 times less risky than Ultra Fund. It trades about 0.09 of its potential returns per unit of risk. Ultra Fund C is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,225 in Ultra Fund C on August 30, 2024 and sell it today you would earn a total of 294.00 from holding Ultra Fund C or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund I vs. Ultra Fund C
Performance |
| Timeline |
| Growth Fund I |
| Ultra Fund C |
Growth Fund and Ultra Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Ultra Fund
The main advantage of trading using opposite Growth Fund and Ultra Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund 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.| Growth Fund vs. Select Fund C | Growth Fund vs. Nasdaq 100 Fund Class | Growth Fund vs. Nasdaq 100 Fund Class | Growth Fund vs. Aquagold International |
| Ultra Fund vs. Ultra Fund R6 | Ultra Fund vs. Select Fund C | Ultra Fund vs. Ultra Fund R | Ultra Fund vs. Select Fund R |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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