Correlation Between Short Precious and Semiconductor Ultrasector

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

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

Diversification Opportunities for Short Precious and Semiconductor Ultrasector

-0.74

Correlation Coefficient

Short Precious  Semiconductor Ultrasector

Pay attention - limited upside

The 3 months correlation between Short and Semiconductor is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Short Precious Metals and Semiconductor Ultrasector Prof in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Ultrasector and Short Precious 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 Short Precious Metals 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 Short Precious i.e., Short Precious and Semiconductor Ultrasector go up and down completely randomly.

Pair Corralation between Short Precious and Semiconductor Ultrasector

Assuming the 90 days horizon Short Precious Metals is expected to under-perform the Semiconductor Ultrasector. But the mutual fund apears to be less risky and, when comparing its historical volatility, Short Precious Metals is 1.09 times less risky than Semiconductor Ultrasector. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Semiconductor Ultrasector Profund is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  3,085  in Semiconductor Ultrasector Profund on May 2, 2025 and sell it today you would earn a total of  2,369  from holding Semiconductor Ultrasector Profund or generate 76.79% return on investment over 90 days.

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

Short Precious Metals  vs.  Semiconductor Ultrasector Prof

Short Precious Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Short Precious Metals has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Semiconductor Ultrasector

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Ultrasector Profund are ranked lower than 31 (%) 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 Short Precious and Semiconductor Ultrasector

The main advantage of trading using opposite Short Precious and Semiconductor Ultrasector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Precious 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 Short Precious Metals 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.