Correlation Between Short-intermediate and Ultrashort Emerging

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

By analyzing existing cross correlation between Short Intermediate Bond Fund and Ultrashort Emerging Markets, you can compare the effects of market volatilities on Short-intermediate and Ultrashort Emerging 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 Short-intermediate with a short position of Ultrashort Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short-intermediate and Ultrashort Emerging.

Diversification Opportunities for Short-intermediate and Ultrashort Emerging

-0.79

Correlation Coefficient

Short-intermediate  Ultrashort Emerging

Pay attention - limited upside

The 3 months correlation between Short-intermediate and Ultrashort is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Short Intermediate Bond Fund and Ultrashort Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrashort Emerging and Short-intermediate 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 Short Intermediate Bond Fund are associated (or correlated) with Ultrashort Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrashort Emerging has no effect on the direction of Short-intermediate i.e., Short-intermediate and Ultrashort Emerging go up and down completely randomly.

Pair Corralation between Short-intermediate and Ultrashort Emerging

Assuming the 90 days horizon Short Intermediate Bond Fund is expected to generate 0.07 times more return on investment than Ultrashort Emerging. However, Short Intermediate Bond Fund is 14.53 times less risky than Ultrashort Emerging. It trades about 0.2 of its potential returns per unit of risk. Ultrashort Emerging Markets is currently generating about -0.13 per unit of risk. If you would invest  898.00  in Short Intermediate Bond Fund on May 26, 2025 and sell it today you would earn a total of  15.00  from holding Short Intermediate Bond Fund or generate 1.67% return on investment over 90 days.

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

Short Intermediate Bond Fund  vs.  Ultrashort Emerging Markets

Short Intermediate Bond

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Short Intermediate Bond Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Short-intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ultrashort Emerging

Risk-Adjusted Performance

Weakest

Over the last 90 days Ultrashort Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Short-intermediate and Ultrashort Emerging

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

The idea behind Short Intermediate Bond Fund and Ultrashort Emerging Markets 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.