Correlation Between Profunds Large and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Profunds Large and Absolute Convertible 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 Profunds Large and Absolute Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profunds Large Cap Growth and Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Profunds Large and Absolute Convertible 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 Profunds Large with a short position of Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds Large and Absolute Convertible.
Diversification Opportunities for Profunds Large and Absolute Convertible
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Profunds and Absolute is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Large Cap Growth and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible and Profunds Large 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 Profunds Large Cap Growth are associated (or correlated) with Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Profunds Large i.e., Profunds Large and Absolute Convertible go up and down completely randomly.
Pair Corralation between Profunds Large and Absolute Convertible
Assuming the 90 days horizon Profunds Large Cap Growth is expected to generate 19.43 times more return on investment than Absolute Convertible. However, Profunds Large is 19.43 times more volatile than Absolute Convertible Arbitrage. It trades about 0.11 of its potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.56 per unit of risk. If you would invest 2,631 in Profunds Large Cap Growth on September 2, 2024 and sell it today you would earn a total of 866.00 from holding Profunds Large Cap Growth or generate 32.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Profunds Large Cap Growth vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Profunds Large Cap |
| Absolute Convertible |
Profunds Large and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profunds Large and Absolute Convertible
The main advantage of trading using opposite Profunds Large and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profunds Large position performs unexpectedly, Absolute Convertible 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Profunds Large vs. Short Real Estate | Profunds Large vs. Ultrashort Mid Cap Profund | Profunds Large vs. Technology Ultrasector Profund | Profunds Large vs. Technology Ultrasector Profund |
| Absolute Convertible vs. Angel Oak Multi Strategy | Absolute Convertible vs. Transamerica Emerging Markets | Absolute Convertible vs. Black Oak Emerging | Absolute Convertible vs. Barings Emerging Markets |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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