Correlation Between Europacific Growth and Intermediate Bond
Can any of the company-specific risk be diversified away by investing in both Europacific Growth and Intermediate Bond 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 Europacific Growth and Intermediate Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europacific Growth Fund and Intermediate Bond Fund, you can compare the effects of market volatilities on Europacific Growth and Intermediate Bond 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 Europacific Growth with a short position of Intermediate Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europacific Growth and Intermediate Bond.
Diversification Opportunities for Europacific Growth and Intermediate Bond
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Europacific and Intermediate is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Europacific Growth Fund and Intermediate Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Bond and Europacific 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 Europacific Growth Fund are associated (or correlated) with Intermediate Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Bond has no effect on the direction of Europacific Growth i.e., Europacific Growth and Intermediate Bond go up and down completely randomly.
Pair Corralation between Europacific Growth and Intermediate Bond
Assuming the 90 days horizon Europacific Growth Fund is expected to under-perform the Intermediate Bond. In addition to that, Europacific Growth is 4.04 times more volatile than Intermediate Bond Fund. It trades about -0.03 of its total potential returns per unit of risk. Intermediate Bond Fund is currently generating about -0.02 per unit of volatility. If you would invest 1,251 in Intermediate Bond Fund on November 2, 2024 and sell it today you would lose (6.00) from holding Intermediate Bond Fund or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europacific Growth Fund vs. Intermediate Bond Fund
Performance |
| Timeline |
| Europacific Growth |
| Intermediate Bond |
Europacific Growth and Intermediate Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europacific Growth and Intermediate Bond
The main advantage of trading using opposite Europacific Growth and Intermediate Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europacific Growth position performs unexpectedly, Intermediate Bond 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 Intermediate Bond will offset losses from the drop in Intermediate Bond's long position.| Europacific Growth vs. Growth Fund Of | Europacific Growth vs. Washington Mutual Investors | Europacific Growth vs. American Funds Fundamental | Europacific Growth vs. New World Fund |
| Intermediate Bond vs. Bond Fund Of | Intermediate Bond vs. American High Income | Intermediate Bond vs. Smallcap World Fund | Intermediate Bond vs. Capital World Bond |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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