Correlation Between Large Cap and Multi Index

Can any of the company-specific risk be diversified away by investing in both Large Cap and Multi Index 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 Multi Index 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 Multi Index 2045 Lifetime, you can compare the effects of market volatilities on Large Cap and Multi Index 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 Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Multi Index.

Diversification Opportunities for Large Cap and Multi Index

1.0

Correlation Coefficient

Large Cap  Multi Index

No risk reduction

The 3 months correlation between Large and Multi is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund and Multi Index 2045 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2045 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 Multi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2045 has no effect on the direction of Large Cap i.e., Large Cap and Multi Index go up and down completely randomly.

Pair Corralation between Large Cap and Multi Index

Assuming the 90 days horizon Large Cap Growth Profund is expected to generate 1.43 times more return on investment than Multi Index. However, Large Cap is 1.43 times more volatile than Multi Index 2045 Lifetime. It trades about 0.34 of its potential returns per unit of risk. Multi Index 2045 Lifetime is currently generating about 0.29 per unit of risk. If you would invest  4,229  in Large Cap Growth Profund on April 30, 2025 and sell it today you would earn a total of  836.00  from holding Large Cap Growth Profund or generate 19.77% 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 Growth Profund  vs.  Multi Index 2045 Lifetime

Large Cap Growth

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Growth Profund are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Large Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Multi Index 2045

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Index 2045 Lifetime are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multi Index may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Large Cap and Multi Index

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

The idea behind Large Cap Growth Profund and Multi Index 2045 Lifetime 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.