Correlation Between Growth Fund and Redwood Systematic
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Redwood Systematic 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 Redwood Systematic 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 Redwood Systematic Macro, you can compare the effects of market volatilities on Growth Fund and Redwood Systematic 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 Redwood Systematic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Redwood Systematic.
Diversification Opportunities for Growth Fund and Redwood Systematic
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Growth and Redwood is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Redwood Systematic Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Systematic Macro 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 Redwood Systematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Systematic Macro has no effect on the direction of Growth Fund i.e., Growth Fund and Redwood Systematic go up and down completely randomly.
Pair Corralation between Growth Fund and Redwood Systematic
Assuming the 90 days horizon Growth Fund Of is expected to generate 1.52 times more return on investment than Redwood Systematic. However, Growth Fund is 1.52 times more volatile than Redwood Systematic Macro. It trades about 0.24 of its potential returns per unit of risk. Redwood Systematic Macro is currently generating about 0.19 per unit of risk. If you would invest 7,457 in Growth Fund Of on November 3, 2024 and sell it today you would earn a total of 374.00 from holding Growth Fund Of or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Growth Fund Of vs. Redwood Systematic Macro
Performance |
| Timeline |
| Growth Fund |
| Redwood Systematic Macro |
Growth Fund and Redwood Systematic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Redwood Systematic
The main advantage of trading using opposite Growth Fund and Redwood Systematic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Redwood Systematic 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 Redwood Systematic will offset losses from the drop in Redwood Systematic'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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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