Correlation Between Focused International and Value Fund
Can any of the company-specific risk be diversified away by investing in both Focused International and Value Fund 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 Focused International and Value Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focused International Growth and Value Fund Investor, you can compare the effects of market volatilities on Focused International and Value Fund 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 Focused International with a short position of Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focused International and Value Fund.
Diversification Opportunities for Focused International and Value Fund
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Focused and Value is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Focused International Growth and Value Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund Investor and Focused International 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 Focused International Growth are associated (or correlated) with Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund Investor has no effect on the direction of Focused International i.e., Focused International and Value Fund go up and down completely randomly.
Pair Corralation between Focused International and Value Fund
Assuming the 90 days horizon Focused International Growth is expected to generate 1.66 times more return on investment than Value Fund. However, Focused International is 1.66 times more volatile than Value Fund Investor. It trades about 0.03 of its potential returns per unit of risk. Value Fund Investor is currently generating about -0.09 per unit of risk. If you would invest 1,739 in Focused International Growth on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Focused International Growth or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Focused International Growth vs. Value Fund Investor
Performance |
| Timeline |
| Focused International |
| Value Fund Investor |
Focused International and Value Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focused International and Value Fund
The main advantage of trading using opposite Focused International and Value Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focused International position performs unexpectedly, Value Fund 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 Value Fund will offset losses from the drop in Value Fund's long position.| Focused International vs. Dodge Cox Stock | Focused International vs. Large Cap Growth Profund | Focused International vs. Touchstone Large Cap | Focused International vs. Transamerica Large Cap |
| Value Fund vs. International Growth Fund | Value Fund vs. Growth Fund Investor | Value Fund vs. Equity Income Fund | Value Fund vs. Ultra Fund Investor |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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