Correlation Between Equity Growth and Redwood Managed
Can any of the company-specific risk be diversified away by investing in both Equity Growth and Redwood Managed 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 Redwood Managed 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 Redwood Managed Municipal, you can compare the effects of market volatilities on Equity Growth and Redwood Managed 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 Redwood Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Growth and Redwood Managed.
Diversification Opportunities for Equity Growth and Redwood Managed
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Equity and Redwood is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Equity Growth Fund and Redwood Managed Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Managed Municipal 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 Redwood Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Managed Municipal has no effect on the direction of Equity Growth i.e., Equity Growth and Redwood Managed go up and down completely randomly.
Pair Corralation between Equity Growth and Redwood Managed
Assuming the 90 days horizon Equity Growth Fund is expected to generate 4.69 times more return on investment than Redwood Managed. However, Equity Growth is 4.69 times more volatile than Redwood Managed Municipal. It trades about 0.13 of its potential returns per unit of risk. Redwood Managed Municipal is currently generating about 0.1 per unit of risk. If you would invest 3,001 in Equity Growth Fund on September 1, 2024 and sell it today you would earn a total of 435.00 from holding Equity Growth Fund or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Equity Growth Fund vs. Redwood Managed Municipal
Performance |
| Timeline |
| Equity Growth |
| Redwood Managed Municipal |
Equity Growth and Redwood Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Growth and Redwood Managed
The main advantage of trading using opposite Equity Growth and Redwood Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Growth position performs unexpectedly, Redwood Managed 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 Managed will offset losses from the drop in Redwood Managed's long position.| Equity Growth vs. Oklahoma College Savings | Equity Growth vs. Ab Bond Inflation | Equity Growth vs. Cref Inflation Linked Bond | Equity Growth vs. Ab Bond Inflation |
| Redwood Managed vs. Redwood Alphafactor Tactical | Redwood Managed vs. Redwood Systematic Macro | Redwood Managed vs. Neuberger Berman Genesis | Redwood Managed vs. Calamos Strategic Total |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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