Correlation Between Fundamental Large and Profunds-large Cap

Can any of the company-specific risk be diversified away by investing in both Fundamental Large 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 Fundamental Large 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 Fundamental Large Cap and Profunds Large Cap Growth, you can compare the effects of market volatilities on Fundamental Large 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 Fundamental Large with a short position of Profunds-large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Large and Profunds-large Cap.

Diversification Opportunities for Fundamental Large and Profunds-large Cap

0.91

Correlation Coefficient

Fundamental Large  Profunds-large Cap

Almost no diversification

The 3 months correlation between Fundamental and Profunds-large is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Large Cap 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 Fundamental Large 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 Fundamental Large Cap 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 Fundamental Large i.e., Fundamental Large and Profunds-large Cap go up and down completely randomly.

Pair Corralation between Fundamental Large and Profunds-large Cap

Assuming the 90 days horizon Fundamental Large is expected to generate 1.33 times less return on investment than Profunds-large Cap. But when comparing it to its historical volatility, Fundamental Large Cap is 1.26 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 of returns per unit of risk over similar time horizon. If you would invest  3,975  in Profunds Large Cap Growth on September 6, 2025 and sell it today you would earn a total of  228.00  from holding Profunds Large Cap Growth or generate 5.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Fundamental Large Cap  vs.  Profunds Large Cap Growth

Fundamental Large Cap

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Fundamental Large Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fundamental Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Profunds Large Cap

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Profunds Large Cap Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Profunds-large Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fundamental Large and Profunds-large Cap

The main advantage of trading using opposite Fundamental Large and Profunds-large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundamental Large 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.

The idea behind Fundamental Large Cap and Profunds Large Cap Growth 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.