Correlation Between Monthly Rebalance and Large-cap Growth

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

By analyzing existing cross correlation between Monthly Rebalance Nasdaq 100 and Large Cap Growth Profund, you can compare the effects of market volatilities on Monthly Rebalance and Large-cap Growth 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 Monthly Rebalance with a short position of Large-cap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monthly Rebalance and Large-cap Growth.

Diversification Opportunities for Monthly Rebalance and Large-cap Growth

1.0

Correlation Coefficient

Monthly Rebalance  Large-cap Growth

No risk reduction

The 3 months correlation between Monthly and Large-cap is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Monthly Rebalance Nasdaq 100 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 Monthly Rebalance 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 Monthly Rebalance Nasdaq 100 are associated (or correlated) with Large-cap Growth. 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 Monthly Rebalance i.e., Monthly Rebalance and Large-cap Growth go up and down completely randomly.

Pair Corralation between Monthly Rebalance and Large-cap Growth

Assuming the 90 days horizon Monthly Rebalance Nasdaq 100 is expected to generate 1.96 times more return on investment than Large-cap Growth. However, Monthly Rebalance is 1.96 times more volatile than Large Cap Growth Profund. It trades about 0.22 of its potential returns per unit of risk. Large Cap Growth Profund is currently generating about 0.22 per unit of risk. If you would invest  51,375  in Monthly Rebalance Nasdaq 100 on May 17, 2025 and sell it today you would earn a total of  11,188  from holding Monthly Rebalance Nasdaq 100 or generate 21.78% return on investment over 90 days.

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

Monthly Rebalance Nasdaq 100  vs.  Large Cap Growth Profund

Monthly Rebalance

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Monthly Rebalance Nasdaq 100 are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Monthly Rebalance 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 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Large-cap Growth may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Monthly Rebalance and Large-cap Growth

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

The idea behind Monthly Rebalance Nasdaq 100 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.