Correlation Between IPath Series and Ultra Fund

Can any of the company-specific risk be diversified away by investing in both IPath Series and Ultra Fund 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 IPath Series and Ultra Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iPath Series B and Ultra Fund Investor, you can compare the effects of market volatilities on IPath Series and Ultra Fund 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 IPath Series with a short position of Ultra Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPath Series and Ultra Fund.

Diversification Opportunities for IPath Series and Ultra Fund

-0.57

Correlation Coefficient

IPath Series  Ultra Fund

Excellent diversification

The 3 months correlation between IPath and Ultra is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding iPath Series B and Ultra Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Fund Investor and IPath Series 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 iPath Series B are associated (or correlated) with Ultra Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Fund Investor has no effect on the direction of IPath Series i.e., IPath Series and Ultra Fund go up and down completely randomly.

Pair Corralation between IPath Series and Ultra Fund

Considering the 90-day investment horizon iPath Series B is expected to under-perform the Ultra Fund. In addition to that, IPath Series is 1.66 times more volatile than Ultra Fund Investor. It trades about -0.02 of its total potential returns per unit of risk. Ultra Fund Investor is currently generating about 0.2 per unit of volatility. If you would invest  8,524  in Ultra Fund Investor on May 5, 2025 and sell it today you would earn a total of  1,036  from holding Ultra Fund Investor or generate 12.15% return on investment over 90 days.

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

iPath Series B  vs.  Ultra Fund Investor

iPath Series B

Risk-Adjusted Performance

Very Weak

Over the last 90 days iPath Series B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, IPath Series is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Ultra Fund Investor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ultra Fund Investor are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ultra Fund may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with IPath Series and Ultra Fund

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

The idea behind iPath Series B and Ultra Fund Investor 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.