Correlation Between Capital World and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Capital World and Growth Fund 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 Capital World and Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Growth and Growth Fund Of, you can compare the effects of market volatilities on Capital World and Growth Fund 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 Capital World with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Growth Fund.
Diversification Opportunities for Capital World and Growth Fund
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capital and Growth is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund and Capital World 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 Capital World Growth are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Capital World i.e., Capital World and Growth Fund go up and down completely randomly.
Pair Corralation between Capital World and Growth Fund
Assuming the 90 days horizon Capital World is expected to generate 267.71 times less return on investment than Growth Fund. But when comparing it to its historical volatility, Capital World Growth is 1.5 times less risky than Growth Fund. It trades about 0.0 of its potential returns per unit of risk. Growth Fund Of is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 7,878 in Growth Fund Of on August 28, 2024 and sell it today you would earn a total of 323.00 from holding Growth Fund Of or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Growth vs. Growth Fund Of
Performance |
| Timeline |
| Capital World Growth |
| Growth Fund |
Capital World and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and Growth Fund
The main advantage of trading using opposite Capital World and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.| Capital World vs. Ultramid Cap Profund Ultramid Cap | Capital World vs. Royce Opportunity Fund | Capital World vs. Fidelity Small Cap | Capital World vs. Columbia Small Cap |
| Growth Fund vs. Capital World Growth | Growth Fund vs. Europacific Growth Fund | Growth Fund vs. New Perspective Fund | Growth Fund vs. Investment Of America |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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