Correlation Between Growth Fund and Sextant Growth
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Sextant 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 Growth Fund and Sextant Growth 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 Sextant Growth Fund, you can compare the effects of market volatilities on Growth Fund and Sextant 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 Growth Fund with a short position of Sextant Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Sextant Growth.
Diversification Opportunities for Growth Fund and Sextant Growth
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and Sextant is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Sextant Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant Growth 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 Sextant Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant Growth has no effect on the direction of Growth Fund i.e., Growth Fund and Sextant Growth go up and down completely randomly.
Pair Corralation between Growth Fund and Sextant Growth
Assuming the 90 days horizon Growth Fund Of is expected to generate 0.98 times more return on investment than Sextant Growth. However, Growth Fund Of is 1.02 times less risky than Sextant Growth. It trades about 0.17 of its potential returns per unit of risk. Sextant Growth Fund is currently generating about 0.15 per unit of risk. If you would invest 7,810 in Growth Fund Of on September 13, 2024 and sell it today you would earn a total of 491.00 from holding Growth Fund Of or generate 6.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Growth Fund Of vs. Sextant Growth Fund
Performance |
| Timeline |
| Growth Fund |
| Sextant Growth |
Growth Fund and Sextant Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Sextant Growth
The main advantage of trading using opposite Growth Fund and Sextant Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Sextant 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 Sextant Growth will offset losses from the drop in Sextant Growth's long position.| Growth Fund vs. Alternative Asset Allocation | Growth Fund vs. Touchstone Large Cap | Growth Fund vs. Rational Strategic Allocation | Growth Fund vs. Qs Large Cap |
| Sextant Growth vs. Sextant International Fund | Sextant Growth vs. Sextant Bond Income | Sextant Growth vs. Teton Westwood Equity | Sextant Growth vs. Value Line Premier |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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