Correlation Between Consumer Services and Internet Ultrasector

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

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

Diversification Opportunities for Consumer Services and Internet Ultrasector

0.4

Correlation Coefficient

Consumer Services  Internet Ultrasector

Very weak diversification

The 3 months correlation between Consumer and Internet is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Services Ultrasector and Internet Ultrasector Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internet Ultrasector and Consumer Services 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 Consumer Services Ultrasector are associated (or correlated) with Internet Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internet Ultrasector has no effect on the direction of Consumer Services i.e., Consumer Services and Internet Ultrasector go up and down completely randomly.

Pair Corralation between Consumer Services and Internet Ultrasector

Assuming the 90 days horizon Consumer Services is expected to generate 1.26 times less return on investment than Internet Ultrasector. In addition to that, Consumer Services is 1.21 times more volatile than Internet Ultrasector Profund. It trades about 0.18 of its total potential returns per unit of risk. Internet Ultrasector Profund is currently generating about 0.28 per unit of volatility. If you would invest  4,859  in Internet Ultrasector Profund on April 24, 2025 and sell it today you would earn a total of  1,371  from holding Internet Ultrasector Profund or generate 28.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Consumer Services Ultrasector  vs.  Internet Ultrasector Profund

Consumer Services

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Consumer Services Ultrasector are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Consumer Services showed solid returns over the last few months and may actually be approaching a breakup point.

Internet Ultrasector

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Internet Ultrasector Profund are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Internet Ultrasector showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Consumer Services and Internet Ultrasector

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

The idea behind Consumer Services Ultrasector and Internet Ultrasector Profund 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.