Correlation Between Internet Ultrasector and Causeway Emerging

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

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

Diversification Opportunities for Internet Ultrasector and Causeway Emerging

0.95

Correlation Coefficient

Internet Ultrasector  Causeway Emerging

Almost no diversification

The 3 months correlation between Internet and Causeway is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Internet Ultrasector Profund and Causeway Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway Emerging Markets and Internet 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 Internet Ultrasector Profund are associated (or correlated) with Causeway Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway Emerging Markets has no effect on the direction of Internet Ultrasector i.e., Internet Ultrasector and Causeway Emerging go up and down completely randomly.

Pair Corralation between Internet Ultrasector and Causeway Emerging

Assuming the 90 days horizon Internet Ultrasector is expected to generate 1.01 times less return on investment than Causeway Emerging. In addition to that, Internet Ultrasector is 1.95 times more volatile than Causeway Emerging Markets. It trades about 0.11 of its total potential returns per unit of risk. Causeway Emerging Markets is currently generating about 0.22 per unit of volatility. If you would invest  1,175  in Causeway Emerging Markets on May 14, 2025 and sell it today you would earn a total of  131.00  from holding Causeway Emerging Markets or generate 11.15% return on investment over 90 days.

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

Internet Ultrasector Profund  vs.  Causeway Emerging Markets

Internet Ultrasector

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Internet Ultrasector Profund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Internet Ultrasector may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Causeway Emerging Markets

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Causeway Emerging Markets are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Causeway Emerging may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Internet Ultrasector and Causeway Emerging

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

The idea behind Internet Ultrasector Profund and Causeway 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.