Correlation Between Inflation Adjusted and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Inflation Adjusted and Growth Fund 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 Inflation Adjusted and Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Adjusted Bond Fund and Growth Fund A, you can compare the effects of market volatilities on Inflation Adjusted and Growth Fund 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 Inflation Adjusted with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation Adjusted and Growth Fund.
Diversification Opportunities for Inflation Adjusted and Growth Fund
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Inflation and Growth is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Adjusted Bond Fund and Growth Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund A and Inflation Adjusted 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 Inflation Adjusted Bond Fund are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund A has no effect on the direction of Inflation Adjusted i.e., Inflation Adjusted and Growth Fund go up and down completely randomly.
Pair Corralation between Inflation Adjusted and Growth Fund
Assuming the 90 days horizon Inflation Adjusted Bond Fund is expected to under-perform the Growth Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Inflation Adjusted Bond Fund is 3.57 times less risky than Growth Fund. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Growth Fund A is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,595 in Growth Fund A on September 19, 2024 and sell it today you would earn a total of 68.00 from holding Growth Fund A or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflation Adjusted Bond Fund vs. Growth Fund A
Performance |
| Timeline |
| Inflation Adjusted Bond |
| Growth Fund A |
Inflation Adjusted and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation Adjusted and Growth Fund
The main advantage of trading using opposite Inflation Adjusted and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation Adjusted position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.| Inflation Adjusted vs. Mid Cap Value | Inflation Adjusted vs. Equity Growth Fund | Inflation Adjusted vs. Income Growth Fund | Inflation Adjusted vs. Diversified Bond Fund |
| Growth Fund vs. Cmg Ultra Short | Growth Fund vs. Astor Longshort Fund | Growth Fund vs. Blackrock Short Term Inflat Protected | Growth Fund vs. Lord Abbett Short |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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