Correlation Between Large Capitalization and Qs Large

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

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

Diversification Opportunities for Large Capitalization and Qs Large

-0.03

Correlation Coefficient

Large Capitalization  Qs Large

Good diversification

The 3 months correlation between Large and LMUSX is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Large Capitalization Growth and Qs Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Large Cap and Large Capitalization 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 Capitalization Growth are associated (or correlated) with Qs Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Large Cap has no effect on the direction of Large Capitalization i.e., Large Capitalization and Qs Large go up and down completely randomly.

Pair Corralation between Large Capitalization and Qs Large

Assuming the 90 days horizon Large Capitalization Growth is expected to under-perform the Qs Large. In addition to that, Large Capitalization is 19.16 times more volatile than Qs Large Cap. It trades about -0.19 of its total potential returns per unit of risk. Qs Large Cap is currently generating about 0.16 per unit of volatility. If you would invest  2,557  in Qs Large Cap on September 15, 2024 and sell it today you would earn a total of  53.00  from holding Qs Large Cap or generate 2.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Large Capitalization Growth  vs.  Qs Large Cap

Large Capitalization

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Large Capitalization Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Qs Large Cap

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Large Cap are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Qs Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Large Capitalization and Qs Large

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

The idea behind Large Capitalization Growth and Qs 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.