Correlation Between Nicholas Fund and Large Cap
Can any of the company-specific risk be diversified away by investing in both Nicholas 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 Nicholas 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 Nicholas Fund Inc and Large Cap Growth Profund, you can compare the effects of market volatilities on Nicholas 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 Nicholas Fund with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nicholas Fund and Large Cap.
Diversification Opportunities for Nicholas Fund and Large Cap
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nicholas and Large is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Nicholas Fund Inc 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 Nicholas 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 Nicholas Fund Inc 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 Growth has no effect on the direction of Nicholas Fund i.e., Nicholas Fund and Large Cap go up and down completely randomly.
Pair Corralation between Nicholas Fund and Large Cap
Assuming the 90 days horizon Nicholas Fund is expected to generate 1.91 times less return on investment than Large Cap. But when comparing it to its historical volatility, Nicholas Fund Inc is 1.29 times less risky than Large Cap. It trades about 0.13 of its potential returns per unit of risk. Large Cap Growth Profund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,187 in Large Cap Growth Profund on September 17, 2024 and sell it today you would earn a total of 491.00 from holding Large Cap Growth Profund or generate 11.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Nicholas Fund Inc vs. Large Cap Growth Profund
Performance |
Timeline |
Nicholas Fund |
Large Cap Growth |
Nicholas Fund and Large Cap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nicholas Fund and Large Cap
The main advantage of trading using opposite Nicholas Fund and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nicholas 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.Nicholas Fund vs. Large Cap Growth Profund | Nicholas Fund vs. Virtus Nfj Large Cap | Nicholas Fund vs. M Large Cap | Nicholas Fund vs. Pace Large Value |
Large Cap vs. Guidemark Large Cap | Large Cap vs. Morningstar Unconstrained Allocation | Large Cap vs. Fm Investments Large | Large Cap vs. Falcon Focus Scv |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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