Correlation Between Semiconductor Ultrasector and Precious Metals

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

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

Diversification Opportunities for Semiconductor Ultrasector and Precious Metals

0.76

Correlation Coefficient

Semiconductor Ultrasector  Precious Metals

Poor diversification

The 3 months correlation between Semiconductor and Precious is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Ultrasector Prof and Precious Metals Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals Ultr and Semiconductor 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 Semiconductor Ultrasector Profund are associated (or correlated) with Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals Ultr has no effect on the direction of Semiconductor Ultrasector i.e., Semiconductor Ultrasector and Precious Metals go up and down completely randomly.

Pair Corralation between Semiconductor Ultrasector and Precious Metals

Assuming the 90 days horizon Semiconductor Ultrasector is expected to generate 2.77 times less return on investment than Precious Metals. But when comparing it to its historical volatility, Semiconductor Ultrasector Profund is 1.23 times less risky than Precious Metals. It trades about 0.15 of its potential returns per unit of risk. Precious Metals Ultrasector is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  8,399  in Precious Metals Ultrasector on June 30, 2025 and sell it today you would earn a total of  6,038  from holding Precious Metals Ultrasector or generate 71.89% return on investment over 90 days.

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

Semiconductor Ultrasector Prof  vs.  Precious Metals Ultrasector

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 11 (%) 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.

Precious Metals Ultr

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Precious Metals Ultrasector are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Precious Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Semiconductor Ultrasector and Precious Metals

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

The idea behind Semiconductor Ultrasector Profund and Precious Metals Ultrasector 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.