Correlation Between Income Growth and Income Fund
Can any of the company-specific risk be diversified away by investing in both Income Growth and Income 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 Income Growth and Income Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Income Growth Fund and Income Fund Institutional, you can compare the effects of market volatilities on Income Growth and Income 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 Income Growth with a short position of Income Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and Income Fund.
Diversification Opportunities for Income Growth and Income Fund
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Income and Income is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth Fund and Income Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund Institutional and Income 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 Income Growth Fund are associated (or correlated) with Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund Institutional has no effect on the direction of Income Growth i.e., Income Growth and Income Fund go up and down completely randomly.
Pair Corralation between Income Growth and Income Fund
Assuming the 90 days horizon Income Growth Fund is expected to under-perform the Income Fund. In addition to that, Income Growth is 2.07 times more volatile than Income Fund Institutional. It trades about -0.18 of its total potential returns per unit of risk. Income Fund Institutional is currently generating about 0.17 per unit of volatility. If you would invest 907.00 in Income Fund Institutional on November 27, 2024 and sell it today you would earn a total of 9.00 from holding Income Fund Institutional or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Growth Fund vs. Income Fund Institutional
Performance |
| Timeline |
| Income Growth |
| Income Fund Institutional |
Income Growth and Income Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Growth and Income Fund
The main advantage of trading using opposite Income Growth and Income Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Growth position performs unexpectedly, Income 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 Income Fund will offset losses from the drop in Income Fund's long position.| Income Growth vs. Ultra Fund I | Income Growth vs. Value Fund I | Income Growth vs. Equity Growth Fund | Income Growth vs. International Growth Fund |
| Income Fund vs. Voya Retirement Growth | Income Fund vs. American Funds Retirement | Income Fund vs. Franklin Lifesmart Retirement | Income Fund vs. Voya Target Retirement |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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