Correlation Between Pace Large and Large Cap
Can any of the company-specific risk be diversified away by investing in both Pace Large and Large Cap 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 Pace Large and Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Large Value and Large Cap Growth Profund, you can compare the effects of market volatilities on Pace Large and Large Cap 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 Pace Large with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Large and Large Cap.
Diversification Opportunities for Pace Large and Large Cap
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pace and Large is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Pace Large Value and Large Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Growth and Pace 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 Pace Large Value are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Growth has no effect on the direction of Pace Large i.e., Pace Large and Large Cap go up and down completely randomly.
Pair Corralation between Pace Large and Large Cap
Assuming the 90 days horizon Pace Large is expected to generate 1.65 times less return on investment than Large Cap. But when comparing it to its historical volatility, Pace Large Value is 1.36 times less risky than Large Cap. It trades about 0.09 of its potential returns per unit of risk. Large Cap Growth Profund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,884 in Large Cap Growth Profund on September 1, 2024 and sell it today you would earn a total of 1,599 from holding Large Cap Growth Profund or generate 55.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace Large Value vs. Large Cap Growth Profund
Performance |
| Timeline |
| Pace Large Value |
| Large Cap Growth |
Pace Large and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Large and Large Cap
The main advantage of trading using opposite Pace Large and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Large position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Pace Large vs. Principal Lifetime Hybrid | Pace Large vs. Touchstone Large Cap | Pace Large vs. Tax Managed Large Cap | Pace Large vs. Federated Kaufmann Large |
| Large Cap vs. Short Real Estate | Large Cap vs. Ultrashort Mid Cap Profund | Large Cap vs. Technology Ultrasector Profund | Large Cap vs. Technology Ultrasector 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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