Correlation Between Income Growth and Select Fund
Can any of the company-specific risk be diversified away by investing in both Income Growth and Select 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 Select 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 Select Fund A, you can compare the effects of market volatilities on Income Growth and Select 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 Select Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and Select Fund.
Diversification Opportunities for Income Growth and Select Fund
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Income and Select is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth Fund and Select Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Fund A 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 Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund A has no effect on the direction of Income Growth i.e., Income Growth and Select Fund go up and down completely randomly.
Pair Corralation between Income Growth and Select Fund
Assuming the 90 days horizon Income Growth Fund is expected to generate 0.76 times more return on investment than Select Fund. However, Income Growth Fund is 1.32 times less risky than Select Fund. It trades about 0.29 of its potential returns per unit of risk. Select Fund A is currently generating about 0.05 per unit of risk. If you would invest 3,740 in Income Growth Fund on August 30, 2024 and sell it today you would earn a total of 198.00 from holding Income Growth Fund or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Income Growth Fund vs. Select Fund A
Performance |
| Timeline |
| Income Growth |
| Select Fund A |
Income Growth and Select Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Growth and Select Fund
The main advantage of trading using opposite Income Growth and Select Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Growth position performs unexpectedly, Select 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 Select Fund will offset losses from the drop in Select 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 |
| Select Fund vs. Ultra Fund A | Select Fund vs. International Growth Fund | Select Fund vs. Select Fund I | Select Fund vs. Growth Fund A |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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