Correlation Between Growth Fund and Large Cap
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Large 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 Growth Fund and Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Large Cap Growth Profund, you can compare the effects of market volatilities on Growth Fund and Large 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 Growth Fund with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Large Cap.
Diversification Opportunities for Growth Fund and Large Cap
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Growth and Large is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Large Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Growth and Growth Fund 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 Growth Fund Of are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Growth has no effect on the direction of Growth Fund i.e., Growth Fund and Large Cap go up and down completely randomly.
Pair Corralation between Growth Fund and Large Cap
Assuming the 90 days horizon Growth Fund Of is expected to under-perform the Large Cap. In addition to that, Growth Fund is 2.26 times more volatile than Large Cap Growth Profund. It trades about -0.15 of its total potential returns per unit of risk. Large Cap Growth Profund is currently generating about 0.0 per unit of volatility. If you would invest 4,635 in Large Cap Growth Profund on October 9, 2024 and sell it today you would lose (2.00) from holding Large Cap Growth Profund or give up 0.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Large Cap Growth Profund
Performance |
| Timeline |
| Growth Fund |
| Large Cap Growth |
Growth Fund and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Large Cap
The main advantage of trading using opposite Growth Fund and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Large 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 Large Cap will offset losses from the drop in Large Cap's long position.| Growth Fund vs. Franklin Small Cap | Growth Fund vs. Artisan Small Cap | Growth Fund vs. Small Pany Growth | Growth Fund vs. Hunter Small Cap |
| Large Cap vs. Stone Ridge Diversified | Large Cap vs. Fulcrum Diversified Absolute | Large Cap vs. Madison Diversified Income | Large Cap vs. Northern Small Cap |
Check out your portfolio center.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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