Correlation Between ULT and Maker

Can any of the company-specific risk be diversified away by investing in both ULT and Maker 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 ULT and Maker into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ULT and Maker, you can compare the effects of market volatilities on ULT and Maker 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 ULT with a short position of Maker. Check out your portfolio center. Please also check ongoing floating volatility patterns of ULT and Maker.

Diversification Opportunities for ULT and Maker

-0.87

Correlation Coefficient

ULT  Maker

Pay attention - limited upside

The 3 months correlation between ULT and Maker is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding ULT and Maker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maker and ULT 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 ULT are associated (or correlated) with Maker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maker has no effect on the direction of ULT i.e., ULT and Maker go up and down completely randomly.

Pair Corralation between ULT and Maker

If you would invest  0.45  in ULT on January 29, 2024 and sell it today you would earn a total of  0.00  from holding ULT or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

ULT  vs.  Maker

ULT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ULT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ULT is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Maker

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maker are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Maker exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ULT and Maker

The main advantage of trading using opposite ULT and Maker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ULT position performs unexpectedly, Maker 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 Maker will offset losses from the drop in Maker's long position.

The idea behind ULT and Maker 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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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.