Correlation Between Financials Ultrasector and Optimum Fixed

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

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

Diversification Opportunities for Financials Ultrasector and Optimum Fixed

0.35

Correlation Coefficient

Financials Ultrasector  Optimum Fixed

Weak diversification

The 3 months correlation between Financials and Optimum is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Financials Ultrasector Profund and Optimum Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimum Fixed Income and Financials Ultrasector 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 Financials Ultrasector Profund are associated (or correlated) with Optimum Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimum Fixed Income has no effect on the direction of Financials Ultrasector i.e., Financials Ultrasector and Optimum Fixed go up and down completely randomly.

Pair Corralation between Financials Ultrasector and Optimum Fixed

Assuming the 90 days horizon Financials Ultrasector is expected to generate 1.13 times less return on investment than Optimum Fixed. In addition to that, Financials Ultrasector is 4.07 times more volatile than Optimum Fixed Income. It trades about 0.03 of its total potential returns per unit of risk. Optimum Fixed Income is currently generating about 0.15 per unit of volatility. If you would invest  814.00  in Optimum Fixed Income on May 12, 2025 and sell it today you would earn a total of  24.00  from holding Optimum Fixed Income or generate 2.95% return on investment over 90 days.

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

Financials Ultrasector Profund  vs.  Optimum Fixed Income

Financials Ultrasector

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Financials Ultrasector Profund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Financials Ultrasector is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Optimum Fixed Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Optimum Fixed Income are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Optimum Fixed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Financials Ultrasector and Optimum Fixed

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

The idea behind Financials Ultrasector Profund and Optimum Fixed Income 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.