Correlation Between Semiconductor Ultrasector and Small Cap

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

Diversification Opportunities for Semiconductor Ultrasector and Small Cap

0.93

Correlation Coefficient

Semiconductor Ultrasector  Small Cap

Almost no diversification

The 3 months correlation between Semiconductor and Small is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Ultrasector Prof and Small Cap Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Core 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Core has no effect on the direction of Semiconductor Ultrasector i.e., Semiconductor Ultrasector and Small Cap go up and down completely randomly.

Pair Corralation between Semiconductor Ultrasector and Small Cap

Assuming the 90 days horizon Semiconductor Ultrasector Profund is expected to generate 2.22 times more return on investment than Small Cap. However, Semiconductor Ultrasector is 2.22 times more volatile than Small Cap Core. It trades about 0.35 of its potential returns per unit of risk. Small Cap Core is currently generating about 0.11 per unit of risk. If you would invest  3,183  in Semiconductor Ultrasector Profund on May 9, 2025 and sell it today you would earn a total of  2,163  from holding Semiconductor Ultrasector Profund or generate 67.95% return on investment over 90 days.

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

Semiconductor Ultrasector Prof  vs.  Small Cap Core

Semiconductor Ultrasector

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Ultrasector Profund are ranked lower than 27 (%) 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.

Small Cap Core

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Core are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Small Cap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Semiconductor Ultrasector and Small Cap

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

The idea behind Semiconductor Ultrasector Profund and Small Cap Core 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .