Correlation Between Monthly Rebalance and Semiconductor Ultrasector

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

By analyzing existing cross correlation between Monthly Rebalance Nasdaq 100 and Semiconductor Ultrasector Profund, you can compare the effects of market volatilities on Monthly Rebalance and Semiconductor 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 Monthly Rebalance with a short position of Semiconductor Ultrasector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monthly Rebalance and Semiconductor Ultrasector.

Diversification Opportunities for Monthly Rebalance and Semiconductor Ultrasector

0.89

Correlation Coefficient

Monthly Rebalance  Semiconductor Ultrasector

Very poor diversification

The 3 months correlation between Monthly and Semiconductor is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Monthly Rebalance Nasdaq 100 and Semiconductor Ultrasector Prof in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Ultrasector and Monthly Rebalance 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 Monthly Rebalance Nasdaq 100 are associated (or correlated) with Semiconductor Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semiconductor Ultrasector has no effect on the direction of Monthly Rebalance i.e., Monthly Rebalance and Semiconductor Ultrasector go up and down completely randomly.

Pair Corralation between Monthly Rebalance and Semiconductor Ultrasector

Assuming the 90 days horizon Monthly Rebalance is expected to generate 1.64 times less return on investment than Semiconductor Ultrasector. But when comparing it to its historical volatility, Monthly Rebalance Nasdaq 100 is 1.6 times less risky than Semiconductor Ultrasector. It trades about 0.2 of its potential returns per unit of risk. Semiconductor Ultrasector Profund is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4,735  in Semiconductor Ultrasector Profund on July 5, 2025 and sell it today you would earn a total of  1,422  from holding Semiconductor Ultrasector Profund or generate 30.03% return on investment over 90 days.

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

Monthly Rebalance Nasdaq 100  vs.  Semiconductor Ultrasector Prof

Monthly Rebalance

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Monthly Rebalance Nasdaq 100 are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Monthly Rebalance showed solid returns over the last few months and may actually be approaching a breakup point.

Semiconductor Ultrasector

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Ultrasector Profund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Semiconductor Ultrasector showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monthly Rebalance and Semiconductor Ultrasector

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

The idea behind Monthly Rebalance Nasdaq 100 and Semiconductor 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.