Correlation Between Large Cap and Beck Mack

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

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

Diversification Opportunities for Large Cap and Beck Mack

0.87

Correlation Coefficient

Large Cap  Beck Mack

Very poor diversification

The 3 months correlation between Large and Beck is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund and Beck Mack Oliver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beck Mack Oliver 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 Profund are associated (or correlated) with Beck Mack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beck Mack Oliver has no effect on the direction of Large Cap i.e., Large Cap and Beck Mack go up and down completely randomly.

Pair Corralation between Large Cap and Beck Mack

Assuming the 90 days horizon Large Cap Growth Profund is expected to under-perform the Beck Mack. In addition to that, Large Cap is 1.37 times more volatile than Beck Mack Oliver. It trades about -0.11 of its total potential returns per unit of risk. Beck Mack Oliver is currently generating about -0.1 per unit of volatility. If you would invest  2,683  in Beck Mack Oliver on December 20, 2024 and sell it today you would lose (169.00) from holding Beck Mack Oliver or give up 6.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Large Cap Growth Profund  vs.  Beck Mack Oliver

Large Cap Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Large Cap Growth Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Beck Mack Oliver

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beck Mack Oliver has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Large Cap and Beck Mack

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

The idea behind Large Cap Growth Profund and Beck Mack Oliver 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.