Correlation Between Income Growth and Balanced Fund
Can any of the company-specific risk be diversified away by investing in both Income Growth and Balanced 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 Balanced 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 Balanced Fund Investor, you can compare the effects of market volatilities on Income Growth and Balanced 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 Balanced Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and Balanced Fund.
Diversification Opportunities for Income Growth and Balanced Fund
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Income and Balanced is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth Fund and Balanced Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Investor 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 Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Investor has no effect on the direction of Income Growth i.e., Income Growth and Balanced Fund go up and down completely randomly.
Pair Corralation between Income Growth and Balanced Fund
Assuming the 90 days horizon Income Growth Fund is expected to generate 1.53 times more return on investment than Balanced Fund. However, Income Growth is 1.53 times more volatile than Balanced Fund Investor. It trades about 0.29 of its potential returns per unit of risk. Balanced Fund Investor is currently generating about 0.16 per unit of risk. If you would invest 3,741 in Income Growth Fund on August 31, 2024 and sell it today you would earn a total of 197.00 from holding Income Growth Fund or generate 5.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Growth Fund vs. Balanced Fund Investor
Performance |
| Timeline |
| Income Growth |
| Balanced Fund Investor |
Income Growth and Balanced Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Growth and Balanced Fund
The main advantage of trading using opposite Income Growth and Balanced Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Growth position performs unexpectedly, Balanced 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 Balanced Fund will offset losses from the drop in Balanced 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 |
| Balanced Fund vs. Select Fund Investor | Balanced Fund vs. Heritage Fund Investor | Balanced Fund vs. Value Fund Investor | Balanced Fund vs. Growth Fund Investor |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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