Correlation Between Moderately Aggressive and Profunds Large

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

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

Diversification Opportunities for Moderately Aggressive and Profunds Large

0.99

Correlation Coefficient

Moderately Aggressive  Profunds Large

No risk reduction

The 3 months correlation between Moderately and Profunds is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Moderately Aggressive Balanced and Profunds Large Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profunds Large Cap and Moderately Aggressive 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 Moderately Aggressive Balanced are associated (or correlated) with Profunds Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profunds Large Cap has no effect on the direction of Moderately Aggressive i.e., Moderately Aggressive and Profunds Large go up and down completely randomly.

Pair Corralation between Moderately Aggressive and Profunds Large

Assuming the 90 days horizon Moderately Aggressive is expected to generate 2.0 times less return on investment than Profunds Large. But when comparing it to its historical volatility, Moderately Aggressive Balanced is 1.77 times less risky than Profunds Large. It trades about 0.27 of its potential returns per unit of risk. Profunds Large Cap Growth is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  3,332  in Profunds Large Cap Growth on May 3, 2025 and sell it today you would earn a total of  555.00  from holding Profunds Large Cap Growth or generate 16.66% return on investment over 90 days.

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

Moderately Aggressive Balanced  vs.  Profunds Large Cap Growth

Moderately Aggressive

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Moderately Aggressive Balanced are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Moderately Aggressive may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Profunds Large Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Profunds Large Cap Growth are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Profunds Large showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moderately Aggressive and Profunds Large

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

The idea behind Moderately Aggressive Balanced and Profunds Large Cap Growth 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.