Correlation Between Fulcrum Diversified and Utilities Ultrasector

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

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

Diversification Opportunities for Fulcrum Diversified and Utilities Ultrasector

0.52

Correlation Coefficient

Fulcrum Diversified  Utilities Ultrasector

Very weak diversification

The 3 months correlation between Fulcrum and Utilities is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Diversified Absolute and Utilities Ultrasector Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Ultrasector and Fulcrum Diversified 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 Fulcrum Diversified Absolute are associated (or correlated) with Utilities Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Ultrasector has no effect on the direction of Fulcrum Diversified i.e., Fulcrum Diversified and Utilities Ultrasector go up and down completely randomly.

Pair Corralation between Fulcrum Diversified and Utilities Ultrasector

Assuming the 90 days horizon Fulcrum Diversified is expected to generate 3.38 times less return on investment than Utilities Ultrasector. But when comparing it to its historical volatility, Fulcrum Diversified Absolute is 3.52 times less risky than Utilities Ultrasector. It trades about 0.11 of its potential returns per unit of risk. Utilities Ultrasector Profund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  7,475  in Utilities Ultrasector Profund on June 4, 2025 and sell it today you would earn a total of  537.00  from holding Utilities Ultrasector Profund or generate 7.18% return on investment over 90 days.

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

Fulcrum Diversified Absolute  vs.  Utilities Ultrasector Profund

Fulcrum Diversified

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Fulcrum Diversified Absolute are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Fulcrum Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Utilities Ultrasector

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Utilities Ultrasector Profund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Utilities Ultrasector may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Pair Trading with Fulcrum Diversified and Utilities Ultrasector

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

The idea behind Fulcrum Diversified Absolute and Utilities 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.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.