Correlation Between Growth Fund and CochLear
Can any of the company-specific risk be diversified away by investing in both Growth Fund and CochLear 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 CochLear 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 CochLear Ltd ADR, you can compare the effects of market volatilities on Growth Fund and CochLear 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 CochLear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and CochLear.
Diversification Opportunities for Growth Fund and CochLear
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Growth and CochLear is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and CochLear Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CochLear ADR 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 CochLear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CochLear ADR has no effect on the direction of Growth Fund i.e., Growth Fund and CochLear go up and down completely randomly.
Pair Corralation between Growth Fund and CochLear
Assuming the 90 days horizon Growth Fund is expected to generate 1.7 times less return on investment than CochLear. But when comparing it to its historical volatility, Growth Fund Of is 1.69 times less risky than CochLear. It trades about 0.24 of its potential returns per unit of risk. CochLear Ltd ADR is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 9,112 in CochLear Ltd ADR on November 3, 2024 and sell it today you would earn a total of 779.00 from holding CochLear Ltd ADR or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. CochLear Ltd ADR
Performance |
| Timeline |
| Growth Fund |
| CochLear ADR |
Growth Fund and CochLear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and CochLear
The main advantage of trading using opposite Growth Fund and CochLear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, CochLear 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 CochLear will offset losses from the drop in CochLear'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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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