Correlation Between Large Cap and Laudus Us

Can any of the company-specific risk be diversified away by investing in both Large Cap and Laudus Us 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 Laudus Us into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Large Cap Growth and Laudus Large Cap, you can compare the effects of market volatilities on Large Cap and Laudus Us 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 Laudus Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Laudus Us.

Diversification Opportunities for Large Cap and Laudus Us

0.94

Correlation Coefficient

Large Cap  Laudus Us

Almost no diversification

The 3 months correlation between LARGE and Laudus is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth and Laudus Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laudus Large Cap 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 Growth are associated (or correlated) with Laudus Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laudus Large Cap has no effect on the direction of Large Cap i.e., Large Cap and Laudus Us go up and down completely randomly.

Pair Corralation between Large Cap and Laudus Us

Assuming the 90 days horizon Large Cap is expected to generate 1.32 times less return on investment than Laudus Us. In addition to that, Large Cap is 1.12 times more volatile than Laudus Large Cap. It trades about 0.24 of its total potential returns per unit of risk. Laudus Large Cap is currently generating about 0.35 per unit of volatility. If you would invest  2,680  in Laudus Large Cap on September 6, 2024 and sell it today you would earn a total of  199.00  from holding Laudus Large Cap or generate 7.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Large Cap Growth  vs.  Laudus Large Cap

Large Cap Growth

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Growth are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Large Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Laudus Large Cap

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Laudus Large Cap are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Laudus Us showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Large Cap and Laudus Us

The main advantage of trading using opposite Large Cap and Laudus Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap position performs unexpectedly, Laudus Us 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 Laudus Us will offset losses from the drop in Laudus Us' long position.

The idea behind Large Cap Growth and Laudus Large Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..