Correlation Between Europacific Growth and International Equity
Can any of the company-specific risk be diversified away by investing in both Europacific Growth and International Equity 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 Europacific Growth and International Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europacific Growth Fund and International Equity Fund, you can compare the effects of market volatilities on Europacific Growth and International Equity 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 Europacific Growth with a short position of International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europacific Growth and International Equity.
Diversification Opportunities for Europacific Growth and International Equity
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Europacific and International is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Europacific Growth Fund and International Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity and Europacific 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 Europacific Growth Fund are associated (or correlated) with International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Europacific Growth i.e., Europacific Growth and International Equity go up and down completely randomly.
Pair Corralation between Europacific Growth and International Equity
Assuming the 90 days horizon Europacific Growth Fund is expected to generate 0.84 times more return on investment than International Equity. However, Europacific Growth Fund is 1.19 times less risky than International Equity. It trades about 0.0 of its potential returns per unit of risk. International Equity Fund is currently generating about -0.07 per unit of risk. If you would invest 5,719 in Europacific Growth Fund on September 3, 2024 and sell it today you would lose (1.00) from holding Europacific Growth Fund or give up 0.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europacific Growth Fund vs. International Equity Fund
Performance |
| Timeline |
| Europacific Growth |
| International Equity |
Europacific Growth and International Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europacific Growth and International Equity
The main advantage of trading using opposite Europacific Growth and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europacific Growth position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity's long position.| Europacific Growth vs. Fidelity International Growth | Europacific Growth vs. Fidelity Small Cap | Europacific Growth vs. Fidelity Advisor Mid | Europacific Growth vs. HUMANA INC |
| International Equity vs. Touchstone Premium Yield | International Equity vs. Transamerica Funds | International Equity vs. Artisan High Income | International Equity vs. Bbh Intermediate Municipal |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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