Correlation Between Investment and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Investment 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 Investment and Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment Of America and Growth Fund Of, you can compare the effects of market volatilities on Investment 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 Investment with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Growth Fund.
Diversification Opportunities for Investment and Growth Fund
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Investment and Growth is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Investment Of America and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund and Investment 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 Investment Of America 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 has no effect on the direction of Investment i.e., Investment and Growth Fund go up and down completely randomly.
Pair Corralation between Investment and Growth Fund
Assuming the 90 days horizon Investment Of America is expected to generate 0.76 times more return on investment than Growth Fund. However, Investment Of America is 1.31 times less risky than Growth Fund. It trades about 0.12 of its potential returns per unit of risk. Growth Fund Of is currently generating about 0.09 per unit of risk. If you would invest 3,948 in Investment Of America on September 2, 2024 and sell it today you would earn a total of 2,336 from holding Investment Of America or generate 59.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment Of America vs. Growth Fund Of
Performance |
| Timeline |
| Investment Of America |
| Growth Fund |
Investment and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and Growth Fund
The main advantage of trading using opposite Investment and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment 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.| Investment vs. New World Fund | Investment vs. Washington Mutual Investors | Investment vs. Smallcap World Fund | Investment vs. Capital World Growth |
| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Capital World Growth | Growth Fund vs. American Funds Fundamental | Growth Fund vs. Washington Mutual Investors |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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