Correlation Between Qs Large and Large Cap

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

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

Diversification Opportunities for Qs Large and Large Cap

1.0

Correlation Coefficient

Qs Large  Large Cap

No risk reduction

The 3 months correlation between LMUSX and Large is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Qs Large Cap and Large Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Growth and Qs 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 Qs Large Cap are associated (or correlated) with 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 Large Cap Growth has no effect on the direction of Qs Large i.e., Qs Large and Large Cap go up and down completely randomly.

Pair Corralation between Qs Large and Large Cap

Assuming the 90 days horizon Qs Large is expected to generate 1.41 times less return on investment than Large Cap. But when comparing it to its historical volatility, Qs Large Cap is 1.19 times less risky than Large Cap. It trades about 0.27 of its potential returns per unit of risk. Large Cap Growth Profund is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  4,274  in Large Cap Growth Profund on May 1, 2025 and sell it today you would earn a total of  791.00  from holding Large Cap Growth Profund or generate 18.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Qs Large Cap  vs.  Large Cap Growth Profund

Qs Large Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Large Cap are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Qs Large showed solid returns over the last few months and may actually be approaching a breakup point.

Large Cap Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Growth Profund are ranked lower than 25 (%) 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.

Pair Trading with Qs Large and Large Cap

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

The idea behind Qs Large Cap and Large Cap Growth Profund 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.