Correlation Between Disciplined Growth and International Growth
Can any of the company-specific risk be diversified away by investing in both Disciplined Growth and International Growth 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 Disciplined Growth and International Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Disciplined Growth Fund and International Growth Fund, you can compare the effects of market volatilities on Disciplined Growth and International Growth 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 Disciplined Growth with a short position of International Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disciplined Growth and International Growth.
Diversification Opportunities for Disciplined Growth and International Growth
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Disciplined and International is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Disciplined Growth Fund and International Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Growth and Disciplined Growth 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 Disciplined Growth Fund are associated (or correlated) with International Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Growth has no effect on the direction of Disciplined Growth i.e., Disciplined Growth and International Growth go up and down completely randomly.
Pair Corralation between Disciplined Growth and International Growth
Assuming the 90 days horizon Disciplined Growth Fund is expected to generate 1.17 times more return on investment than International Growth. However, Disciplined Growth is 1.17 times more volatile than International Growth Fund. It trades about 0.11 of its potential returns per unit of risk. International Growth Fund is currently generating about 0.04 per unit of risk. If you would invest 1,761 in Disciplined Growth Fund on August 30, 2024 and sell it today you would earn a total of 1,369 from holding Disciplined Growth Fund or generate 77.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Disciplined Growth Fund vs. International Growth Fund
Performance |
| Timeline |
| Disciplined Growth |
| International Growth |
Disciplined Growth and International Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disciplined Growth and International Growth
The main advantage of trading using opposite Disciplined Growth and International Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disciplined Growth position performs unexpectedly, International Growth 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 International Growth will offset losses from the drop in International Growth's long position.| Disciplined Growth vs. Growth Fund Of | Disciplined Growth vs. HUMANA INC | Disciplined Growth vs. Aquagold International | Disciplined Growth vs. Barloworld Ltd ADR |
| International Growth vs. Europacific Growth Fund | International Growth vs. Europacific Growth Fund | International Growth vs. Europacific Growth Fund | International Growth vs. Europacific Growth Fund |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |