Correlation Between Mid-cap Growth and Profunds-large Cap
Can any of the company-specific risk be diversified away by investing in both Mid-cap Growth and Profunds-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 Mid-cap Growth and Profunds-large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap Growth Profund and Profunds Large Cap Growth, you can compare the effects of market volatilities on Mid-cap Growth and Profunds-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 Mid-cap Growth with a short position of Profunds-large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-cap Growth and Profunds-large Cap.
Diversification Opportunities for Mid-cap Growth and Profunds-large Cap
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mid-cap and Profunds-large is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth Profund and Profunds Large Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profunds Large Cap and Mid-cap Growth 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 Mid Cap Growth Profund are associated (or correlated) with Profunds-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 Profunds Large Cap has no effect on the direction of Mid-cap Growth i.e., Mid-cap Growth and Profunds-large Cap go up and down completely randomly.
Pair Corralation between Mid-cap Growth and Profunds-large Cap
Assuming the 90 days horizon Mid Cap Growth Profund is expected to generate 0.85 times more return on investment than Profunds-large Cap. However, Mid Cap Growth Profund is 1.18 times less risky than Profunds-large Cap. It trades about -0.09 of its potential returns per unit of risk. Profunds Large Cap Growth is currently generating about -0.09 per unit of risk. If you would invest 10,608 in Mid Cap Growth Profund on December 28, 2024 and sell it today you would lose (745.00) from holding Mid Cap Growth Profund or give up 7.02% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Mid Cap Growth Profund vs. Profunds Large Cap Growth
Performance |
Timeline |
Mid Cap Growth |
Profunds Large Cap |
Mid-cap Growth and Profunds-large Cap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mid-cap Growth and Profunds-large Cap
The main advantage of trading using opposite Mid-cap Growth and Profunds-large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-cap Growth position performs unexpectedly, Profunds-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 Profunds-large Cap will offset losses from the drop in Profunds-large Cap's long position.Mid-cap Growth vs. Small Cap Growth Profund | Mid-cap Growth vs. Mid Cap Value Profund | Mid-cap Growth vs. Small Cap Value Profund | Mid-cap Growth vs. Mid Cap Profund Mid Cap |
Profunds-large Cap vs. Legg Mason Global | Profunds-large Cap vs. Doubleline Global Bond | Profunds-large Cap vs. Blue Current Global | Profunds-large Cap vs. Siit Global Managed |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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