Correlation Between Electronics Fund and Large Cap
Can any of the company-specific risk be diversified away by investing in both Electronics Fund 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 Electronics Fund and Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronics Fund Class and Large Cap Growth Profund, you can compare the effects of market volatilities on Electronics Fund 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 Electronics Fund with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronics Fund and Large Cap.
Diversification Opportunities for Electronics Fund and Large Cap
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Electronics and Large is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Electronics Fund Class 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 Electronics Fund 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 Electronics Fund Class 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 Electronics Fund i.e., Electronics Fund and Large Cap go up and down completely randomly.
Pair Corralation between Electronics Fund and Large Cap
Assuming the 90 days horizon Electronics Fund Class is expected to generate 1.45 times more return on investment than Large Cap. However, Electronics Fund is 1.45 times more volatile than Large Cap Growth Profund. It trades about 0.02 of its potential returns per unit of risk. Large Cap Growth Profund is currently generating about -0.16 per unit of risk. If you would invest 32,706 in Electronics Fund Class on October 18, 2024 and sell it today you would earn a total of 173.00 from holding Electronics Fund Class or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronics Fund Class vs. Large Cap Growth Profund
Performance |
| Timeline |
| Electronics Fund Class |
| Large Cap Growth |
Electronics Fund and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronics Fund and Large Cap
The main advantage of trading using opposite Electronics Fund and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronics Fund 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.| Electronics Fund vs. Fundamental Large Cap | Electronics Fund vs. Calvert Large Cap | Electronics Fund vs. Ab Large Cap | Electronics Fund vs. Qs Large Cap |
| Large Cap vs. Catalystmillburn Hedge Strategy | Large Cap vs. Dow 2x Strategy | Large Cap vs. Franklin Emerging Market | Large Cap vs. Ashmore 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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