Correlation Between Profunds-large Cap and Nasdaq-100 Profund
Can any of the company-specific risk be diversified away by investing in both Profunds-large Cap and Nasdaq-100 Profund 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 Nasdaq-100 Profund 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 Nasdaq 100 Profund Nasdaq 100, you can compare the effects of market volatilities on Profunds-large Cap and Nasdaq-100 Profund 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 Nasdaq-100 Profund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds-large Cap and Nasdaq-100 Profund.
Diversification Opportunities for Profunds-large Cap and Nasdaq-100 Profund
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Profunds-large and Nasdaq-100 is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Large Cap Growth and Nasdaq 100 Profund Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Profund 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 Nasdaq-100 Profund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 Profund has no effect on the direction of Profunds-large Cap i.e., Profunds-large Cap and Nasdaq-100 Profund go up and down completely randomly.
Pair Corralation between Profunds-large Cap and Nasdaq-100 Profund
Assuming the 90 days horizon Profunds-large Cap is expected to generate 1.05 times less return on investment than Nasdaq-100 Profund. But when comparing it to its historical volatility, Profunds Large Cap Growth is 1.03 times less risky than Nasdaq-100 Profund. It trades about 0.13 of its potential returns per unit of risk. Nasdaq 100 Profund Nasdaq 100 is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,319 in Nasdaq 100 Profund Nasdaq 100 on August 24, 2024 and sell it today you would earn a total of 140.00 from holding Nasdaq 100 Profund Nasdaq 100 or generate 3.24% 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. Nasdaq 100 Profund Nasdaq 100
Performance |
| Timeline |
| Profunds Large Cap |
| Nasdaq 100 Profund |
Profunds-large Cap and Nasdaq-100 Profund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profunds-large Cap and Nasdaq-100 Profund
The main advantage of trading using opposite Profunds-large Cap and Nasdaq-100 Profund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profunds-large Cap position performs unexpectedly, Nasdaq-100 Profund 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 Nasdaq-100 Profund will offset losses from the drop in Nasdaq-100 Profund's long position.| Profunds-large Cap vs. Schwab Treasury Money | Profunds-large Cap vs. Matson Money Equity | Profunds-large Cap vs. Pioneer Money Market | Profunds-large Cap vs. Edward Jones Money |
| Nasdaq-100 Profund vs. Bull Profund Investor | Nasdaq-100 Profund vs. Small Cap Profund Small Cap | Nasdaq-100 Profund vs. Mid Cap Profund Mid Cap | Nasdaq-100 Profund vs. Small Cap Growth 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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