Correlation Between Balanced Fund and Dynamic Growth
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Dynamic Growth 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 Balanced Fund and Dynamic Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Adviser and Dynamic Growth Fund, you can compare the effects of market volatilities on Balanced Fund and Dynamic Growth 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 Balanced Fund with a short position of Dynamic Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Dynamic Growth.
Diversification Opportunities for Balanced Fund and Dynamic Growth
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Balanced and Dynamic is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Adviser and Dynamic Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Growth and Balanced Fund 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 Balanced Fund Adviser are associated (or correlated) with Dynamic Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Growth has no effect on the direction of Balanced Fund i.e., Balanced Fund and Dynamic Growth go up and down completely randomly.
Pair Corralation between Balanced Fund and Dynamic Growth
Assuming the 90 days horizon Balanced Fund Adviser is expected to generate 0.76 times more return on investment than Dynamic Growth. However, Balanced Fund Adviser is 1.32 times less risky than Dynamic Growth. It trades about 0.07 of its potential returns per unit of risk. Dynamic Growth Fund is currently generating about 0.05 per unit of risk. If you would invest 1,424 in Balanced Fund Adviser on August 28, 2024 and sell it today you would earn a total of 35.00 from holding Balanced Fund Adviser or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Adviser vs. Dynamic Growth Fund
Performance |
| Timeline |
| Balanced Fund Adviser |
| Dynamic Growth |
Balanced Fund and Dynamic Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Dynamic Growth
The main advantage of trading using opposite Balanced Fund and Dynamic Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Dynamic Growth 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 Dynamic Growth will offset losses from the drop in Dynamic Growth's long position.| Balanced Fund vs. Dynamic Growth Fund | Balanced Fund vs. Infrastructure Fund Retail | Balanced Fund vs. Quantex Fund Retail | Balanced Fund vs. Spectrum Fund Retail |
| Dynamic Growth vs. Muirfield Fund Retail | Dynamic Growth vs. Quantex Fund Retail | Dynamic Growth vs. Balanced Fund Retail | Dynamic Growth vs. Infrastructure Fund Retail |
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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