Correlation Between Growth Fund and Bright Rock
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Bright Rock 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 Growth Fund and Bright Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Bright Rock Mid, you can compare the effects of market volatilities on Growth Fund and Bright Rock 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 Growth Fund with a short position of Bright Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Bright Rock.
Diversification Opportunities for Growth Fund and Bright Rock
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and Bright is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Bright Rock Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Rock Mid and Growth 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 Growth Fund Of are associated (or correlated) with Bright Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Rock Mid has no effect on the direction of Growth Fund i.e., Growth Fund and Bright Rock go up and down completely randomly.
Pair Corralation between Growth Fund and Bright Rock
Assuming the 90 days horizon Growth Fund Of is expected to generate 1.36 times more return on investment than Bright Rock. However, Growth Fund is 1.36 times more volatile than Bright Rock Mid. It trades about 0.12 of its potential returns per unit of risk. Bright Rock Mid is currently generating about 0.14 per unit of risk. If you would invest 6,947 in Growth Fund Of on September 1, 2024 and sell it today you would earn a total of 1,153 from holding Growth Fund Of or generate 16.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Growth Fund Of vs. Bright Rock Mid
Performance |
| Timeline |
| Growth Fund |
| Bright Rock Mid |
Growth Fund and Bright Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Bright Rock
The main advantage of trading using opposite Growth Fund and Bright Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Bright Rock 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 Bright Rock will offset losses from the drop in Bright Rock's long position.| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Washington Mutual Investors | Growth Fund vs. Capital World Growth | Growth Fund vs. American Balanced Fund |
| Bright Rock vs. Quantitative Longshort Equity | Bright Rock vs. Old Westbury Short Term | Bright Rock vs. Franklin Federal Limited Term | Bright Rock vs. Aqr Sustainable Long Short |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |