Correlation Between Largecap Value and 13d Activist

Can any of the company-specific risk be diversified away by investing in both Largecap Value and 13d Activist 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 Largecap Value and 13d Activist into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Largecap Value Fund and 13d Activist Fund, you can compare the effects of market volatilities on Largecap Value and 13d Activist 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 Largecap Value with a short position of 13d Activist. Check out your portfolio center. Please also check ongoing floating volatility patterns of Largecap Value and 13d Activist.

Diversification Opportunities for Largecap Value and 13d Activist

0.94

Correlation Coefficient

Largecap Value  13d Activist

Almost no diversification

The 3 months correlation between Largecap and 13d is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Largecap Value Fund and 13d Activist Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 13d Activist and Largecap Value 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 Largecap Value Fund are associated (or correlated) with 13d Activist. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 13d Activist has no effect on the direction of Largecap Value i.e., Largecap Value and 13d Activist go up and down completely randomly.

Pair Corralation between Largecap Value and 13d Activist

Assuming the 90 days horizon Largecap Value is expected to generate 1.96 times less return on investment than 13d Activist. But when comparing it to its historical volatility, Largecap Value Fund is 1.73 times less risky than 13d Activist. It trades about 0.12 of its potential returns per unit of risk. 13d Activist Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,933  in 13d Activist Fund on May 20, 2025 and sell it today you would earn a total of  189.00  from holding 13d Activist Fund or generate 9.78% return on investment over 90 days.

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

Largecap Value Fund  vs.  13d Activist Fund

Largecap Value

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Largecap Value Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Largecap Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

13d Activist

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in 13d Activist Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, 13d Activist may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Largecap Value and 13d Activist

The main advantage of trading using opposite Largecap Value and 13d Activist positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Largecap Value position performs unexpectedly, 13d Activist 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 13d Activist will offset losses from the drop in 13d Activist's long position.

The idea behind Largecap Value Fund and 13d Activist 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 Global Correlations module to find global opportunities by holding instruments from different markets.