Correlation Between Equity Growth and Gotham Hedged
Can any of the company-specific risk be diversified away by investing in both Equity Growth and Gotham Hedged 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 Equity Growth and Gotham Hedged into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Growth Fund and Gotham Hedged E, you can compare the effects of market volatilities on Equity Growth and Gotham Hedged 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 Equity Growth with a short position of Gotham Hedged. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Growth and Gotham Hedged.
Diversification Opportunities for Equity Growth and Gotham Hedged
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Equity and Gotham is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Equity Growth Fund and Gotham Hedged E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Hedged E and Equity Growth 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 Equity Growth Fund are associated (or correlated) with Gotham Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Hedged E has no effect on the direction of Equity Growth i.e., Equity Growth and Gotham Hedged go up and down completely randomly.
Pair Corralation between Equity Growth and Gotham Hedged
Assuming the 90 days horizon Equity Growth Fund is expected to under-perform the Gotham Hedged. In addition to that, Equity Growth is 1.16 times more volatile than Gotham Hedged E. It trades about -0.07 of its total potential returns per unit of risk. Gotham Hedged E is currently generating about 0.18 per unit of volatility. If you would invest 1,177 in Gotham Hedged E on November 28, 2024 and sell it today you would earn a total of 27.00 from holding Gotham Hedged E or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Growth Fund vs. Gotham Hedged E
Performance |
| Timeline |
| Equity Growth |
| Gotham Hedged E |
Equity Growth and Gotham Hedged Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Growth and Gotham Hedged
The main advantage of trading using opposite Equity Growth and Gotham Hedged positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Growth position performs unexpectedly, Gotham Hedged 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 Gotham Hedged will offset losses from the drop in Gotham Hedged's long position.| Equity Growth vs. Allianzgi Technology Fund | Equity Growth vs. Dreyfus Technology Growth | Equity Growth vs. T Rowe Price | Equity Growth vs. Pgim Jennison Technology |
| Gotham Hedged vs. Rational Strategic Allocation | Gotham Hedged vs. Knights Of Umbus | Gotham Hedged vs. Balanced Allocation Fund | Gotham Hedged vs. Dodge Cox Stock |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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