Correlation Between Growth Fund and Arbitrage Fund
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Arbitrage 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 Growth Fund and Arbitrage Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and The Arbitrage Fund, you can compare the effects of market volatilities on Growth Fund and Arbitrage 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 Growth Fund with a short position of Arbitrage Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Arbitrage Fund.
Diversification Opportunities for Growth Fund and Arbitrage Fund
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Growth and Arbitrage is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and The Arbitrage Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Fund and Growth 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 Growth Fund Of are associated (or correlated) with Arbitrage Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Fund has no effect on the direction of Growth Fund i.e., Growth Fund and Arbitrage Fund go up and down completely randomly.
Pair Corralation between Growth Fund and Arbitrage Fund
Assuming the 90 days horizon Growth Fund Of is expected to generate 3.56 times more return on investment than Arbitrage Fund. However, Growth Fund is 3.56 times more volatile than The Arbitrage Fund. It trades about 0.11 of its potential returns per unit of risk. The Arbitrage Fund is currently generating about 0.03 per unit of risk. If you would invest 4,967 in Growth Fund Of on August 29, 2024 and sell it today you would earn a total of 3,259 from holding Growth Fund Of or generate 65.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Growth Fund Of vs. The Arbitrage Fund
Performance |
| Timeline |
| Growth Fund |
| Arbitrage Fund |
Growth Fund and Arbitrage Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Arbitrage Fund
The main advantage of trading using opposite Growth Fund and Arbitrage Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Arbitrage 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 Arbitrage Fund will offset losses from the drop in Arbitrage Fund's long position.| Growth Fund vs. Capital World Growth | Growth Fund vs. Europacific Growth Fund | Growth Fund vs. New Perspective Fund | Growth Fund vs. Investment Of America |
| Arbitrage Fund vs. The Merger Fund | Arbitrage Fund vs. Calamos Market Neutral | Arbitrage Fund vs. Hussman Strategic Growth | Arbitrage Fund vs. Gateway Fund Class |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |