Correlation Between Profunds-large Cap and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Profunds-large Cap and Dow Jones 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 Cap and Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Profunds-large Cap and Dow Jones 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 Cap with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds-large Cap and Dow Jones.
Diversification Opportunities for Profunds-large Cap and Dow Jones
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Profunds-large and Dow is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Large Cap Growth and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Profunds-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 Profunds Large Cap Growth are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Profunds-large Cap i.e., Profunds-large Cap and Dow Jones go up and down completely randomly.
Pair Corralation between Profunds-large Cap and Dow Jones
Assuming the 90 days horizon Profunds-large Cap is expected to generate 2.34 times less return on investment than Dow Jones. In addition to that, Profunds-large Cap is 1.82 times more volatile than Dow Jones Industrial. It trades about 0.09 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of volatility. If you would invest 4,252,836 in Dow Jones Industrial on November 8, 2024 and sell it today you would earn a total of 234,492 from holding Dow Jones Industrial or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Profunds Large Cap Growth vs. Dow Jones Industrial
Performance |
| Timeline |
Profunds-large Cap and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Profunds Large Cap Growth
Pair trading matchups for Profunds-large Cap
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Profunds-large Cap and Dow Jones
The main advantage of trading using opposite Profunds-large Cap and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profunds-large Cap position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Profunds-large Cap vs. Vanguard Developed Markets | Profunds-large Cap vs. Federated Emerging Market | Profunds-large Cap vs. Old Westbury Short Term | Profunds-large Cap vs. Aqr Equity Market |
| Dow Jones vs. Viemed Healthcare | Dow Jones vs. Alphatec Holdings | Dow Jones vs. Tandem Diabetes Care | Dow Jones vs. Alvotech |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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