Correlation Between Profunds-large Cap and World Energy
Can any of the company-specific risk be diversified away by investing in both Profunds-large Cap and World Energy 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 Profunds-large Cap and World Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Profunds Large Cap Growth and World Energy Fund, you can compare the effects of market volatilities on Profunds-large Cap and World Energy 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 Profunds-large Cap with a short position of World Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds-large Cap and World Energy.
Diversification Opportunities for Profunds-large Cap and World Energy
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Profunds-large and World is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Large Cap Growth and World Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Energy and Profunds-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 Profunds Large Cap Growth are associated (or correlated) with World Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Energy has no effect on the direction of Profunds-large Cap i.e., Profunds-large Cap and World Energy go up and down completely randomly.
Pair Corralation between Profunds-large Cap and World Energy
Assuming the 90 days horizon Profunds Large Cap Growth is expected to generate 0.94 times more return on investment than World Energy. However, Profunds Large Cap Growth is 1.06 times less risky than World Energy. It trades about 0.08 of its potential returns per unit of risk. World Energy Fund is currently generating about 0.05 per unit of risk. If you would invest 2,304 in Profunds Large Cap Growth on March 30, 2025 and sell it today you would earn a total of 1,421 from holding Profunds Large Cap Growth or generate 61.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Profunds Large Cap Growth vs. World Energy Fund
Performance |
| Timeline |
| Profunds Large Cap |
| World Energy |
Profunds-large Cap and World Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profunds-large Cap and World Energy
The main advantage of trading using opposite Profunds-large Cap and World Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profunds-large Cap position performs unexpectedly, World Energy 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 World Energy will offset losses from the drop in World Energy's long position.| Profunds-large Cap vs. Dunham High Yield | Profunds-large Cap vs. Neuberger Berman Income | Profunds-large Cap vs. Siit High Yield | Profunds-large Cap vs. Pax High Yield |
| World Energy vs. Dreyfus Government Cash | World Energy vs. Schwab Government Money | World Energy vs. Columbia Government Mortgage | World Energy vs. Us Government Securities |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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