Correlation Between Auer Growth and Gotham Neutral
Can any of the company-specific risk be diversified away by investing in both Auer Growth and Gotham Neutral 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 Auer Growth and Gotham Neutral into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auer Growth Fund and Gotham Neutral Fund, you can compare the effects of market volatilities on Auer Growth and Gotham Neutral 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 Auer Growth with a short position of Gotham Neutral. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auer Growth and Gotham Neutral.
Diversification Opportunities for Auer Growth and Gotham Neutral
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Auer and Gotham is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Auer Growth Fund and Gotham Neutral Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Neutral and Auer 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 Auer Growth Fund are associated (or correlated) with Gotham Neutral. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Neutral has no effect on the direction of Auer Growth i.e., Auer Growth and Gotham Neutral go up and down completely randomly.
Pair Corralation between Auer Growth and Gotham Neutral
Assuming the 90 days horizon Auer Growth Fund is expected to generate 1.96 times more return on investment than Gotham Neutral. However, Auer Growth is 1.96 times more volatile than Gotham Neutral Fund. It trades about 0.1 of its potential returns per unit of risk. Gotham Neutral Fund is currently generating about -0.11 per unit of risk. If you would invest 1,729 in Auer Growth Fund on September 13, 2024 and sell it today you would earn a total of 24.00 from holding Auer Growth Fund or generate 1.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auer Growth Fund vs. Gotham Neutral Fund
Performance |
| Timeline |
| Auer Growth Fund |
| Gotham Neutral |
Auer Growth and Gotham Neutral Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auer Growth and Gotham Neutral
The main advantage of trading using opposite Auer Growth and Gotham Neutral positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auer Growth position performs unexpectedly, Gotham Neutral 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 Gotham Neutral will offset losses from the drop in Gotham Neutral's long position.| Auer Growth vs. Lebenthal Lisanti Small | Auer Growth vs. Hodges Small Cap | Auer Growth vs. Schwartz Value Focused | Auer Growth vs. Oberweis Small Cap Opportunities |
| Gotham Neutral vs. Gotham Defensive Long | Gotham Neutral vs. Gotham Large Value | Gotham Neutral vs. Gotham Enhanced 500 | Gotham Neutral vs. Gotham Enhanced Return |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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