Correlation Between Large Cap and Stralem Equity
Can any of the company-specific risk be diversified away by investing in both Large Cap and Stralem 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 and Stralem 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 Stralem Equity Fund, you can compare the effects of market volatilities on Large Cap and Stralem 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 with a short position of Stralem Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Stralem Equity.
Diversification Opportunities for Large Cap and Stralem Equity
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Large and Stralem is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund and Stralem Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stralem Equity 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 Growth Profund are associated (or correlated) with Stralem Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stralem Equity has no effect on the direction of Large Cap i.e., Large Cap and Stralem Equity go up and down completely randomly.
Pair Corralation between Large Cap and Stralem Equity
Assuming the 90 days horizon Large Cap Growth Profund is expected to generate 1.3 times more return on investment than Stralem Equity. However, Large Cap is 1.3 times more volatile than Stralem Equity Fund. It trades about 0.13 of its potential returns per unit of risk. Stralem Equity Fund is currently generating about -0.13 per unit of risk. If you would invest 4,536 in Large Cap Growth Profund on September 13, 2024 and sell it today you would earn a total of 88.00 from holding Large Cap Growth Profund or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap Growth Profund vs. Stralem Equity Fund
Performance |
| Timeline |
| Large Cap Growth |
| Stralem Equity |
Large Cap and Stralem Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and Stralem Equity
The main advantage of trading using opposite Large Cap and Stralem Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap position performs unexpectedly, Stralem 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 Stralem Equity will offset losses from the drop in Stralem Equity's long position.| Large Cap vs. Short Real Estate | Large Cap vs. Ultrashort Mid Cap Profund | Large Cap vs. Ultrashort Mid Cap Profund | Large Cap vs. Technology Ultrasector Profund |
| Stralem Equity vs. Locorr Market Trend | Stralem Equity vs. Calvert Developed Market | Stralem Equity vs. Aqr Long Short Equity | Stralem Equity vs. Extended Market Index |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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