Correlation Between Ultra Fund and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Ultra Fund and Growth 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 Growth 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 Growth Fund Of, you can compare the effects of market volatilities on Ultra Fund and Growth 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 Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Fund and Growth Fund.
Diversification Opportunities for Ultra Fund and Growth Fund
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ultra and Growth is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Fund C and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth 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 C are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Ultra Fund i.e., Ultra Fund and Growth Fund go up and down completely randomly.
Pair Corralation between Ultra Fund and Growth Fund
Assuming the 90 days horizon Ultra Fund C is expected to under-perform the Growth Fund. In addition to that, Ultra Fund is 1.21 times more volatile than Growth Fund Of. It trades about -0.29 of its total potential returns per unit of risk. Growth Fund Of is currently generating about -0.28 per unit of volatility. If you would invest 6,842 in Growth Fund Of on January 24, 2024 and sell it today you would lose (342.00) from holding Growth Fund Of or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ultra Fund C vs. Growth Fund Of
Performance |
| Timeline |
| Ultra Fund C |
| Growth Fund |
Ultra Fund and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Fund and Growth Fund
The main advantage of trading using opposite Ultra Fund and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Fund position performs unexpectedly, Growth 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 Growth Fund will offset losses from the drop in Growth Fund's long position.The idea behind Ultra Fund C and Growth Fund Of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Growth Fund vs. Income Fund Of | Growth Fund vs. New World Fund | Growth Fund vs. American Mutual Fund | Growth Fund vs. American Mutual Fund |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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