Correlation Between Income Growth and Intermediate Term
Can any of the company-specific risk be diversified away by investing in both Income Growth and Intermediate Term 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 Intermediate Term 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 Intermediate Term Tax Free Bond, you can compare the effects of market volatilities on Income Growth and Intermediate Term 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 Intermediate Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and Intermediate Term.
Diversification Opportunities for Income Growth and Intermediate Term
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Income and Intermediate is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth Fund and Intermediate Term Tax Free Bon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Term Tax 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 Intermediate Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Term Tax has no effect on the direction of Income Growth i.e., Income Growth and Intermediate Term go up and down completely randomly.
Pair Corralation between Income Growth and Intermediate Term
Assuming the 90 days horizon Income Growth Fund is expected to generate 3.63 times more return on investment than Intermediate Term. However, Income Growth is 3.63 times more volatile than Intermediate Term Tax Free Bond. It trades about 0.12 of its potential returns per unit of risk. Intermediate Term Tax Free Bond is currently generating about 0.07 per unit of risk. If you would invest 2,954 in Income Growth Fund on September 2, 2024 and sell it today you would earn a total of 994.00 from holding Income Growth Fund or generate 33.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Income Growth Fund vs. Intermediate Term Tax Free Bon
Performance |
| Timeline |
| Income Growth |
| Intermediate Term Tax |
Income Growth and Intermediate Term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Income Growth and Intermediate Term
The main advantage of trading using opposite Income Growth and Intermediate Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Growth position performs unexpectedly, Intermediate Term 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 Intermediate Term will offset losses from the drop in Intermediate Term'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 |
| Intermediate Term vs. Issachar Fund Class | Intermediate Term vs. Commonwealth Global Fund | Intermediate Term vs. Artisan Thematic Fund | Intermediate Term vs. Balanced 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |