Correlation Between Growth Fund and Lotus Bakeries
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Lotus Bakeries 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 Lotus Bakeries 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 Lotus Bakeries, you can compare the effects of market volatilities on Growth Fund and Lotus Bakeries 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 Lotus Bakeries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Lotus Bakeries.
Diversification Opportunities for Growth Fund and Lotus Bakeries
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Growth and Lotus is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Lotus Bakeries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Bakeries 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 Lotus Bakeries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Bakeries has no effect on the direction of Growth Fund i.e., Growth Fund and Lotus Bakeries go up and down completely randomly.
Pair Corralation between Growth Fund and Lotus Bakeries
Assuming the 90 days horizon Growth Fund Of is expected to generate 0.78 times more return on investment than Lotus Bakeries. However, Growth Fund Of is 1.28 times less risky than Lotus Bakeries. It trades about 0.08 of its potential returns per unit of risk. Lotus Bakeries is currently generating about -0.04 per unit of risk. If you would invest 7,594 in Growth Fund Of on October 23, 2024 and sell it today you would earn a total of 104.00 from holding Growth Fund Of or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Lotus Bakeries
Performance |
| Timeline |
| Growth Fund |
| Lotus Bakeries |
Growth Fund and Lotus Bakeries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Lotus Bakeries
The main advantage of trading using opposite Growth Fund and Lotus Bakeries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Lotus Bakeries 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 Lotus Bakeries will offset losses from the drop in Lotus Bakeries' 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 |
| Lotus Bakeries vs. Sofina Socit Anonyme | Lotus Bakeries vs. Ackermans Van Haaren | Lotus Bakeries vs. Melexis NV | Lotus Bakeries vs. DIeteren Group SA |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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