Correlation Between Ultra Fund and Small Cap
Can any of the company-specific risk be diversified away by investing in both Ultra Fund and Small 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 Ultra Fund and Small Cap 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 Small Cap Growth, you can compare the effects of market volatilities on Ultra Fund and Small 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 Ultra Fund with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Fund and Small Cap.
Diversification Opportunities for Ultra Fund and Small Cap
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ultra and Small is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Fund I and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Ultra Fund i.e., Ultra Fund and Small Cap go up and down completely randomly.
Pair Corralation between Ultra Fund and Small Cap
Assuming the 90 days horizon Ultra Fund is expected to generate 2.71 times less return on investment than Small Cap. But when comparing it to its historical volatility, Ultra Fund I is 1.2 times less risky than Small Cap. It trades about 0.11 of its potential returns per unit of risk. Small Cap Growth is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,577 in Small Cap Growth on August 26, 2024 and sell it today you would earn a total of 118.00 from holding Small Cap Growth or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Fund I vs. Small Cap Growth
Performance |
| Timeline |
| Ultra Fund I |
| Small Cap Growth |
Ultra Fund and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Fund and Small Cap
The main advantage of trading using opposite Ultra Fund and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Fund position performs unexpectedly, Small 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 Small Cap will offset losses from the drop in Small Cap'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 |
| Small Cap vs. Touchstone International Equity | Small Cap vs. Scharf Fund Retail | Small Cap vs. The Hartford Equity | Small Cap vs. Ab Select Equity |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |