Correlation Between Large Cap and Financial Services
Can any of the company-specific risk be diversified away by investing in both Large Cap and Financial Services 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 Large Cap and Financial Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap Value and Financial Services Portfolio, you can compare the effects of market volatilities on Large Cap and Financial Services 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 Large Cap with a short position of Financial Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Financial Services.
Diversification Opportunities for Large Cap and Financial Services
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Large and Financial is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Value and Financial Services Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Services and 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 Large Cap Value are associated (or correlated) with Financial Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Services has no effect on the direction of Large Cap i.e., Large Cap and Financial Services go up and down completely randomly.
Pair Corralation between Large Cap and Financial Services
If you would invest 2,805 in Large Cap Value on September 1, 2024 and sell it today you would earn a total of 71.00 from holding Large Cap Value or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Large Cap Value vs. Financial Services Portfolio
Performance |
| Timeline |
| Large Cap Value |
| Financial Services |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Large Cap and Financial Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and Financial Services
The main advantage of trading using opposite Large Cap and Financial Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap position performs unexpectedly, Financial Services 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 Financial Services will offset losses from the drop in Financial Services' long position.| Large Cap vs. Calamos Dynamic Convertible | Large Cap vs. The Gamco Global | Large Cap vs. Harbor Vertible Securities | Large Cap vs. Absolute Convertible Arbitrage |
| Financial Services vs. Us Government Securities | Financial Services vs. Virtus Seix Government | Financial Services vs. Dws Government Money | Financial Services vs. Aig Government Money |
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 CEOs Directory module to screen CEOs from public companies around the world.
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