Correlation Between Large-cap Growth and Sustainable Equity
Can any of the company-specific risk be diversified away by investing in both Large-cap Growth and Sustainable Equity 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 Growth and Sustainable Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap Growth Profund and Sustainable Equity Fund, you can compare the effects of market volatilities on Large-cap Growth and Sustainable Equity 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 Growth with a short position of Sustainable Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large-cap Growth and Sustainable Equity.
Diversification Opportunities for Large-cap Growth and Sustainable Equity
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between LARGE-CAP and Sustainable is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund and Sustainable Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sustainable Equity and Large-cap Growth 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 Growth Profund are associated (or correlated) with Sustainable Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sustainable Equity has no effect on the direction of Large-cap Growth i.e., Large-cap Growth and Sustainable Equity go up and down completely randomly.
Pair Corralation between Large-cap Growth and Sustainable Equity
Assuming the 90 days horizon Large Cap Growth Profund is expected to under-perform the Sustainable Equity. In addition to that, Large-cap Growth is 1.26 times more volatile than Sustainable Equity Fund. It trades about -0.02 of its total potential returns per unit of risk. Sustainable Equity Fund is currently generating about 0.05 per unit of volatility. If you would invest 5,460 in Sustainable Equity Fund on October 25, 2024 and sell it today you would earn a total of 40.00 from holding Sustainable Equity Fund or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap Growth Profund vs. Sustainable Equity Fund
Performance |
| Timeline |
| Large Cap Growth |
| Sustainable Equity |
Large-cap Growth and Sustainable Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large-cap Growth and Sustainable Equity
The main advantage of trading using opposite Large-cap Growth and Sustainable Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large-cap Growth position performs unexpectedly, Sustainable Equity 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 Sustainable Equity will offset losses from the drop in Sustainable Equity's long position.| Large-cap Growth vs. Semiconductor Ultrasector Profund | Large-cap Growth vs. Western Asset Adjustable | Large-cap Growth vs. Credit Suisse Floating | Large-cap Growth vs. Rational Dividend Capture |
| Sustainable Equity vs. Ab Global Bond | Sustainable Equity vs. Wisdomtree Siegel Global | Sustainable Equity vs. Qs Global Equity | Sustainable Equity vs. Dws Global Macro |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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