Correlation Between Profunds Ultrashort and Johnson Opportunity

Can any of the company-specific risk be diversified away by investing in both Profunds Ultrashort and Johnson Opportunity 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 Profunds Ultrashort and Johnson Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Profunds Ultrashort Nasdaq 100 and Johnson Opportunity S, you can compare the effects of market volatilities on Profunds Ultrashort and Johnson Opportunity 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 Profunds Ultrashort with a short position of Johnson Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds Ultrashort and Johnson Opportunity.

Diversification Opportunities for Profunds Ultrashort and Johnson Opportunity

-0.83

Correlation Coefficient

Profunds Ultrashort  Johnson Opportunity

Pay attention - limited upside

The 3 months correlation between Profunds and Johnson is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Ultrashort Nasdaq 100 and Johnson Opportunity S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Opportunity and Profunds Ultrashort 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 Profunds Ultrashort Nasdaq 100 are associated (or correlated) with Johnson Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Opportunity has no effect on the direction of Profunds Ultrashort i.e., Profunds Ultrashort and Johnson Opportunity go up and down completely randomly.

Pair Corralation between Profunds Ultrashort and Johnson Opportunity

Assuming the 90 days horizon Profunds Ultrashort Nasdaq 100 is expected to generate 2.81 times more return on investment than Johnson Opportunity. However, Profunds Ultrashort is 2.81 times more volatile than Johnson Opportunity S. It trades about 0.02 of its potential returns per unit of risk. Johnson Opportunity S is currently generating about -0.02 per unit of risk. If you would invest  2,275  in Profunds Ultrashort Nasdaq 100 on February 18, 2025 and sell it today you would lose (57.00) from holding Profunds Ultrashort Nasdaq 100 or give up 2.51% of portfolio value over 90 days.

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

Profunds Ultrashort Nasdaq 100  vs.  Johnson Opportunity S

Profunds Ultrashort

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Profunds Ultrashort Nasdaq 100 are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Profunds Ultrashort is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Johnson Opportunity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Johnson Opportunity S has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Johnson Opportunity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Profunds Ultrashort and Johnson Opportunity

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

The idea behind Profunds Ultrashort Nasdaq 100 and Johnson Opportunity S 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.