Correlation Between Growth Fund and Borgestad
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Borgestad 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 Borgestad 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 Borgestad A, you can compare the effects of market volatilities on Growth Fund and Borgestad 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 Borgestad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Borgestad.
Diversification Opportunities for Growth Fund and Borgestad
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Growth and Borgestad is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Borgestad A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borgestad A 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 Borgestad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borgestad A has no effect on the direction of Growth Fund i.e., Growth Fund and Borgestad go up and down completely randomly.
Pair Corralation between Growth Fund and Borgestad
Assuming the 90 days horizon Growth Fund is expected to generate 1.94 times less return on investment than Borgestad. But when comparing it to its historical volatility, Growth Fund Of is 2.89 times less risky than Borgestad. It trades about 0.1 of its potential returns per unit of risk. Borgestad A is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,200 in Borgestad A on November 3, 2024 and sell it today you would earn a total of 572.00 from holding Borgestad A or generate 47.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Borgestad A
Performance |
| Timeline |
| Growth Fund |
| Borgestad A |
Growth Fund and Borgestad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Borgestad
The main advantage of trading using opposite Growth Fund and Borgestad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Borgestad 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 Borgestad will offset losses from the drop in Borgestad'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 |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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