Correlation Between Qs Us and Small Cap

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

Diversification Opportunities for Qs Us and Small Cap

0.94

Correlation Coefficient

Qs Us  Small Cap

Almost no diversification

The 3 months correlation between LMUSX and Small is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Qs Large Cap and Small Cap Profund Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Profund and Qs Us 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Profund has no effect on the direction of Qs Us i.e., Qs Us and Small Cap go up and down completely randomly.

Pair Corralation between Qs Us and Small Cap

Assuming the 90 days horizon Qs Large Cap is expected to generate 0.48 times more return on investment than Small Cap. However, Qs Large Cap is 2.06 times less risky than Small Cap. It trades about 0.55 of its potential returns per unit of risk. Small Cap Profund Small Cap is currently generating about 0.2 per unit of risk. If you would invest  2,635  in Qs Large Cap on July 4, 2025 and sell it today you would earn a total of  138.00  from holding Qs Large Cap or generate 5.24% 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.  Small Cap Profund Small Cap

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 Us may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Small Cap Profund

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Profund Small Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Small Cap may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Qs Us and Small Cap

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

The idea behind Qs Large Cap and Small Cap Profund Small 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.