Correlation Between Large-cap Growth and Rising Rates
Can any of the company-specific risk be diversified away by investing in both Large-cap Growth and Rising Rates 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 Rising Rates 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 Rising Rates Opportunity, you can compare the effects of market volatilities on Large-cap Growth and Rising Rates 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 Rising Rates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large-cap Growth and Rising Rates.
Diversification Opportunities for Large-cap Growth and Rising Rates
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Large-cap and Rising is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund and Rising Rates Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Rates Opportunity 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 Rising Rates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Rates Opportunity has no effect on the direction of Large-cap Growth i.e., Large-cap Growth and Rising Rates go up and down completely randomly.
Pair Corralation between Large-cap Growth and Rising Rates
Assuming the 90 days horizon Large Cap Growth Profund is expected to generate 1.02 times more return on investment than Rising Rates. However, Large-cap Growth is 1.02 times more volatile than Rising Rates Opportunity. It trades about 0.09 of its potential returns per unit of risk. Rising Rates Opportunity is currently generating about 0.07 per unit of risk. If you would invest 4,386 in Large Cap Growth Profund on August 27, 2024 and sell it today you would earn a total of 87.00 from holding Large Cap Growth Profund or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap Growth Profund vs. Rising Rates Opportunity
Performance |
| Timeline |
| Large Cap Growth |
| Rising Rates Opportunity |
Large-cap Growth and Rising Rates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large-cap Growth and Rising Rates
The main advantage of trading using opposite Large-cap Growth and Rising Rates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large-cap Growth position performs unexpectedly, Rising Rates 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 Rising Rates will offset losses from the drop in Rising Rates' long position.| Large-cap Growth vs. Pace Smallmedium Value | Large-cap Growth vs. Hennessy Nerstone Mid | Large-cap Growth vs. Fpa Queens Road | Large-cap Growth vs. Small Cap Value Series |
| Rising Rates vs. Short Real Estate | Rising Rates vs. Short Real Estate | Rising Rates vs. Ultrashort Mid Cap Profund | Rising Rates vs. Ultrashort Mid Cap Profund |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |