Correlation Between Large Cap and Us Lg
Can any of the company-specific risk be diversified away by investing in both Large Cap and Us Lg 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 Large Cap and Us Lg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap International and Us Lg Cap, you can compare the effects of market volatilities on Large Cap and Us Lg 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 Large Cap with a short position of Us Lg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Us Lg.
Diversification Opportunities for Large Cap and Us Lg
Very good diversification
The 3 months correlation between Large and DUSQX is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap International and Us Lg Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Lg Cap and Large Cap 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 Large Cap International are associated (or correlated) with Us Lg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Lg Cap has no effect on the direction of Large Cap i.e., Large Cap and Us Lg go up and down completely randomly.
Pair Corralation between Large Cap and Us Lg
Assuming the 90 days horizon Large Cap International is expected to under-perform the Us Lg. But the mutual fund apears to be less risky and, when comparing its historical volatility, Large Cap International is 1.15 times less risky than Us Lg. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Us Lg Cap is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,217 in Us Lg Cap on August 31, 2024 and sell it today you would earn a total of 127.00 from holding Us Lg Cap or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap International vs. Us Lg Cap
Performance |
| Timeline |
| Large Cap International |
| Us Lg Cap |
Large Cap and Us Lg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and Us Lg
The main advantage of trading using opposite Large Cap and Us Lg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap position performs unexpectedly, Us Lg 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 Us Lg will offset losses from the drop in Us Lg's long position.| Large Cap vs. Siit Ultra Short | Large Cap vs. Aqr Long Short Equity | Large Cap vs. Federated Ultrashort Bond | Large Cap vs. Ab Select Longshort |
| Us Lg vs. Dfa International Value | Us Lg vs. Us Large Pany | Us Lg vs. Dfa Investment Grade | Us Lg vs. Dfa Sustainability Core |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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