Correlation Between Large Cap and Pro-blend(r) Moderate

Can any of the company-specific risk be diversified away by investing in both Large Cap and Pro-blend(r) Moderate 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 Pro-blend(r) Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Large Cap Fund and Pro Blend Moderate Term, you can compare the effects of market volatilities on Large Cap and Pro-blend(r) Moderate 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 Pro-blend(r) Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Pro-blend(r) Moderate.

Diversification Opportunities for Large Cap and Pro-blend(r) Moderate

0.98

Correlation Coefficient

Large Cap  Pro-blend(r) Moderate

Almost no diversification

The 3 months correlation between Large and Pro-blend(r) is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Fund and Pro Blend Moderate Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro-blend(r) Moderate 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 Fund are associated (or correlated) with Pro-blend(r) Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro-blend(r) Moderate has no effect on the direction of Large Cap i.e., Large Cap and Pro-blend(r) Moderate go up and down completely randomly.

Pair Corralation between Large Cap and Pro-blend(r) Moderate

Assuming the 90 days horizon Large Cap Fund is expected to generate 2.01 times more return on investment than Pro-blend(r) Moderate. However, Large Cap is 2.01 times more volatile than Pro Blend Moderate Term. It trades about 0.24 of its potential returns per unit of risk. Pro Blend Moderate Term is currently generating about 0.28 per unit of risk. If you would invest  1,368  in Large Cap Fund on April 21, 2025 and sell it today you would earn a total of  176.00  from holding Large Cap Fund or generate 12.87% 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 Fund  vs.  Pro Blend Moderate Term

Large Cap Fund

Risk-Adjusted Performance

Solid

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

Pro-blend(r) Moderate

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Blend Moderate Term are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pro-blend(r) Moderate may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Large Cap and Pro-blend(r) Moderate

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

The idea behind Large Cap Fund and Pro Blend Moderate Term 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.