Correlation Between Internet Ultrasector and Paradigm Micro

Can any of the company-specific risk be diversified away by investing in both Internet Ultrasector and Paradigm Micro 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 Paradigm Micro 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 Paradigm Micro Cap Fund, you can compare the effects of market volatilities on Internet Ultrasector and Paradigm Micro 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 Paradigm Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Internet Ultrasector and Paradigm Micro.

Diversification Opportunities for Internet Ultrasector and Paradigm Micro

0.68

Correlation Coefficient

Internet Ultrasector  Paradigm Micro

Poor diversification

The 3 months correlation between Internet and Paradigm is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Internet Ultrasector Profund and Paradigm Micro Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paradigm Micro Cap 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 Paradigm Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paradigm Micro Cap has no effect on the direction of Internet Ultrasector i.e., Internet Ultrasector and Paradigm Micro go up and down completely randomly.

Pair Corralation between Internet Ultrasector and Paradigm Micro

Assuming the 90 days horizon Internet Ultrasector Profund is expected to under-perform the Paradigm Micro. In addition to that, Internet Ultrasector is 1.06 times more volatile than Paradigm Micro Cap Fund. It trades about -0.09 of its total potential returns per unit of risk. Paradigm Micro Cap Fund is currently generating about -0.01 per unit of volatility. If you would invest  5,291  in Paradigm Micro Cap Fund on August 27, 2025 and sell it today you would lose (102.00) from holding Paradigm Micro Cap Fund or give up 1.93% of portfolio value over 90 days.

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

Internet Ultrasector Profund  vs.  Paradigm Micro Cap Fund

Internet Ultrasector

Risk-Adjusted Performance

Weakest

Over the last 90 days Internet Ultrasector Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Paradigm Micro Cap

Risk-Adjusted Performance

Weakest

Over the last 90 days Paradigm Micro Cap Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Paradigm Micro is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Internet Ultrasector and Paradigm Micro

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

The idea behind Internet Ultrasector Profund and Paradigm Micro Cap Fund 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.