Correlation Between Profunds Ultrashort and Horizon Active
Can any of the company-specific risk be diversified away by investing in both Profunds Ultrashort and Horizon Active 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 Profunds Ultrashort and Horizon Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profunds Ultrashort Nasdaq 100 and Horizon Active Asset, you can compare the effects of market volatilities on Profunds Ultrashort and Horizon Active 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 Profunds Ultrashort with a short position of Horizon Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds Ultrashort and Horizon Active.
Diversification Opportunities for Profunds Ultrashort and Horizon Active
-0.97 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Profunds and Horizon is -0.97. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Horizon Active Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Active Asset and Profunds Ultrashort 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 Profunds Ultrashort Nasdaq 100 are associated (or correlated) with Horizon Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Active Asset has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Horizon Active go up and down completely randomly.
Pair Corralation between Profunds Ultrashort and Horizon Active
Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to under-perform the Horizon Active. In addition to that, Profunds Ultrashort is 2.47 times more volatile than Horizon Active Asset. It trades about -0.14 of its total potential returns per unit of risk. Horizon Active Asset is currently generating about 0.19 per unit of volatility. If you would invest 1,359 in Horizon Active Asset on June 4, 2025 and sell it today you would earn a total of 99.00 from holding Horizon Active Asset or generate 7.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Profunds Ultrashort Nasdaq 100 vs. Horizon Active Asset
Performance |
| Timeline |
| Profunds Ultrashort |
| Horizon Active Asset |
Profunds Ultrashort and Horizon Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profunds Ultrashort and Horizon Active
The main advantage of trading using opposite Profunds Ultrashort and Horizon Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profunds Ultrashort position performs unexpectedly, Horizon Active 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 Horizon Active will offset losses from the drop in Horizon Active's long position.The idea behind Profunds Ultrashort Nasdaq 100 and Horizon Active Asset 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.
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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