Correlation Between Balanced Fund and Large Cap
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Large 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 Balanced Fund and Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Retail and Large Cap Value, you can compare the effects of market volatilities on Balanced Fund and Large 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 Balanced Fund with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Large Cap.
Diversification Opportunities for Balanced Fund and Large Cap
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Balanced and Large is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Large Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Value and Balanced Fund 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 Balanced Fund Retail are associated (or correlated) with Large Cap. 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 Value has no effect on the direction of Balanced Fund i.e., Balanced Fund and Large Cap go up and down completely randomly.
Pair Corralation between Balanced Fund and Large Cap
Assuming the 90 days horizon Balanced Fund Retail is expected to generate 0.65 times more return on investment than Large Cap. However, Balanced Fund Retail is 1.53 times less risky than Large Cap. It trades about 0.25 of its potential returns per unit of risk. Large Cap Value is currently generating about 0.14 per unit of risk. If you would invest 1,257 in Balanced Fund Retail on June 4, 2025 and sell it today you would earn a total of 80.00 from holding Balanced Fund Retail or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Retail vs. Large Cap Value
Performance |
| Timeline |
| Balanced Fund Retail |
| Large Cap Value |
Balanced Fund and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Large Cap
The main advantage of trading using opposite Balanced Fund and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Large 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 Large Cap will offset losses from the drop in Large Cap's long position.| Balanced Fund vs. All Asset Fund | Balanced Fund vs. Pimco All Asset | Balanced Fund vs. All Asset Fund | Balanced Fund vs. Pimco All Asset |
| Large Cap vs. Janus High Yield Fund | Large Cap vs. Strategic Advisers Income | Large Cap vs. Federated High Yield | Large Cap vs. Pace High Yield |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |