Correlation Between Ultra Fund and Global Gold
Can any of the company-specific risk be diversified away by investing in both Ultra Fund and Global Gold 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 Global Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Fund I and Global Gold Fund, you can compare the effects of market volatilities on Ultra Fund and Global Gold 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 Global Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Fund and Global Gold.
Diversification Opportunities for Ultra Fund and Global Gold
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ultra and Global is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Fund I and Global Gold Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Gold Fund 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 I are associated (or correlated) with Global Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Gold Fund has no effect on the direction of Ultra Fund i.e., Ultra Fund and Global Gold go up and down completely randomly.
Pair Corralation between Ultra Fund and Global Gold
Assuming the 90 days horizon Ultra Fund I is expected to under-perform the Global Gold. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ultra Fund I is 1.08 times less risky than Global Gold. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Global Gold Fund is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,245 in Global Gold Fund on October 23, 2024 and sell it today you would earn a total of 86.00 from holding Global Gold Fund or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Fund I vs. Global Gold Fund
Performance |
| Timeline |
| Ultra Fund I |
| Global Gold Fund |
Ultra Fund and Global Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Fund and Global Gold
The main advantage of trading using opposite Ultra Fund and Global Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Fund position performs unexpectedly, Global Gold 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 Global Gold will offset losses from the drop in Global Gold's long position.| Ultra Fund vs. Ultra Fund A | Ultra Fund vs. Select Fund I | Ultra Fund vs. Value Fund I | Ultra Fund vs. Income Growth Fund |
| Global Gold vs. Aig Government Money | Global Gold vs. Lord Abbett Emerging | Global Gold vs. Pace Select Advisors | Global Gold vs. John Hancock Money |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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