Correlation Between Growth Fund and Dividend Growth
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Dividend Growth 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 Dividend Growth 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 Dividend Growth Split, you can compare the effects of market volatilities on Growth Fund and Dividend Growth 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 Dividend Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Dividend Growth.
Diversification Opportunities for Growth Fund and Dividend Growth
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Growth and Dividend is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Dividend Growth Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend Growth Split 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 Dividend Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend Growth Split has no effect on the direction of Growth Fund i.e., Growth Fund and Dividend Growth go up and down completely randomly.
Pair Corralation between Growth Fund and Dividend Growth
Assuming the 90 days horizon Growth Fund Of is expected to generate 0.55 times more return on investment than Dividend Growth. However, Growth Fund Of is 1.81 times less risky than Dividend Growth. It trades about 0.17 of its potential returns per unit of risk. Dividend Growth Split is currently generating about -0.03 per unit of risk. If you would invest 7,573 in Growth Fund Of on November 4, 2024 and sell it today you would earn a total of 258.00 from holding Growth Fund Of or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Growth Fund Of vs. Dividend Growth Split
Performance |
| Timeline |
| Growth Fund |
| Dividend Growth Split |
Growth Fund and Dividend Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Dividend Growth
The main advantage of trading using opposite Growth Fund and Dividend Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Dividend Growth 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 Dividend Growth will offset losses from the drop in Dividend Growth'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 |
| Dividend Growth vs. Life Banc Split | Dividend Growth vs. North American Financial | Dividend Growth vs. Financial 15 Split | Dividend Growth vs. Dividend 15 Split |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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