Correlation Between Large Cap and Fam Value
Can any of the company-specific risk be diversified away by investing in both Large Cap and Fam 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 Large Cap and Fam Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap Growth and Fam Value Fund, you can compare the effects of market volatilities on Large Cap and Fam 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 Large Cap with a short position of Fam Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Fam Value.
Diversification Opportunities for Large Cap and Fam Value
Good diversification
The 3 months correlation between Large and Fam is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth and Fam Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fam Value Fund and Large Cap 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 Large Cap Growth are associated (or correlated) with Fam Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fam Value Fund has no effect on the direction of Large Cap i.e., Large Cap and Fam Value go up and down completely randomly.
Pair Corralation between Large Cap and Fam Value
Assuming the 90 days horizon Large Cap Growth is expected to generate 1.27 times more return on investment than Fam Value. However, Large Cap is 1.27 times more volatile than Fam Value Fund. It trades about 0.11 of its potential returns per unit of risk. Fam Value Fund is currently generating about 0.01 per unit of risk. If you would invest 2,910 in Large Cap Growth on September 1, 2025 and sell it today you would earn a total of 201.00 from holding Large Cap Growth or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap Growth vs. Fam Value Fund
Performance |
| Timeline |
| Large Cap Growth |
| Fam Value Fund |
Large Cap and Fam Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and Fam Value
The main advantage of trading using opposite Large Cap and Fam Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap position performs unexpectedly, Fam 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 Fam Value will offset losses from the drop in Fam Value's long position.| Large Cap vs. T Rowe Price | Large Cap vs. Pro Blend Servative Term | Large Cap vs. Ms Global Fixed | Large Cap vs. L Abbett Fundamental |
| Fam Value vs. Ab Global Risk | Fam Value vs. Alternative Asset Allocation | Fam Value vs. The Hartford Growth | Fam Value vs. Sterling Capital Behavioral |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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