Correlation Between Qs Large and Foreign Value

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

Diversification Opportunities for Qs Large and Foreign Value

0.94

Correlation Coefficient

Qs Large  Foreign Value

Almost no diversification

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

Pair Corralation between Qs Large and Foreign Value

Assuming the 90 days horizon Qs Large Cap is expected to generate 1.1 times more return on investment than Foreign Value. However, Qs Large is 1.1 times more volatile than Foreign Value Fund. It trades about 0.24 of its potential returns per unit of risk. Foreign Value Fund is currently generating about 0.15 per unit of risk. If you would invest  2,314  in Qs Large Cap on May 3, 2025 and sell it today you would earn a total of  256.00  from holding Qs Large Cap or generate 11.06% 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.  Foreign Value Fund

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 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Qs Large may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Foreign Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Foreign Value Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Foreign Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Qs Large and Foreign Value

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

The idea behind Qs Large Cap and Foreign Value Fund 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .