Correlation Between Financial Industries and Profunds Ultrashort
Can any of the company-specific risk be diversified away by investing in both Financial Industries and Profunds Ultrashort 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 Financial Industries and Profunds Ultrashort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Industries Fund and Profunds Ultrashort Nasdaq 100, you can compare the effects of market volatilities on Financial Industries and Profunds Ultrashort 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 Financial Industries with a short position of Profunds Ultrashort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Profunds Ultrashort.
Diversification Opportunities for Financial Industries and Profunds Ultrashort
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Financial and Profunds is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Profunds Ultrashort Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profunds Ultrashort and Financial Industries 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 Financial Industries Fund are associated (or correlated) with Profunds Ultrashort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profunds Ultrashort has no effect on the direction of Financial Industries i.e., Financial Industries and Profunds Ultrashort go up and down completely randomly.
Pair Corralation between Financial Industries and Profunds Ultrashort
Assuming the 90 days horizon Financial Industries Fund is expected to generate 0.49 times more return on investment than Profunds Ultrashort. However, Financial Industries Fund is 2.04 times less risky than Profunds Ultrashort. It trades about 0.18 of its potential returns per unit of risk. Profunds Ultrashort Nasdaq 100 is currently generating about -0.3 per unit of risk. If you would invest 1,754 in Financial Industries Fund on April 29, 2025 and sell it today you would earn a total of 173.00 from holding Financial Industries Fund or generate 9.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Industries Fund vs. Profunds Ultrashort Nasdaq 100
Performance |
| Timeline |
| Financial Industries |
| Profunds Ultrashort |
Financial Industries and Profunds Ultrashort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Profunds Ultrashort
The main advantage of trading using opposite Financial Industries and Profunds Ultrashort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries position performs unexpectedly, Profunds Ultrashort 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 Profunds Ultrashort will offset losses from the drop in Profunds Ultrashort's long position.| Financial Industries vs. Davis Government Bond | Financial Industries vs. Inverse Government Long | Financial Industries vs. Virtus Seix Government | Financial Industries vs. Aig Government Money |
| Profunds Ultrashort vs. Franklin Government Money | Profunds Ultrashort vs. Enhanced Fixed Income | Profunds Ultrashort vs. Multisector Bond Sma | Profunds Ultrashort vs. Ab Bond Inflation |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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