Correlation Between Enhanced and Growth Strategy
Can any of the company-specific risk be diversified away by investing in both Enhanced and Growth Strategy 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 Enhanced and Growth Strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enhanced Large Pany and Growth Strategy Fund, you can compare the effects of market volatilities on Enhanced and Growth Strategy 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 Enhanced with a short position of Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhanced and Growth Strategy.
Diversification Opportunities for Enhanced and Growth Strategy
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Enhanced and Growth is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Enhanced Large Pany and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy and Enhanced 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 Enhanced Large Pany are associated (or correlated) with Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of Enhanced i.e., Enhanced and Growth Strategy go up and down completely randomly.
Pair Corralation between Enhanced and Growth Strategy
Assuming the 90 days horizon Enhanced Large Pany is expected to generate 1.58 times more return on investment than Growth Strategy. However, Enhanced is 1.58 times more volatile than Growth Strategy Fund. It trades about 0.37 of its potential returns per unit of risk. Growth Strategy Fund is currently generating about 0.34 per unit of risk. If you would invest 1,476 in Enhanced Large Pany on September 1, 2024 and sell it today you would earn a total of 89.00 from holding Enhanced Large Pany or generate 6.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Enhanced Large Pany vs. Growth Strategy Fund
Performance |
| Timeline |
| Enhanced Large Pany |
| Growth Strategy |
Enhanced and Growth Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enhanced and Growth Strategy
The main advantage of trading using opposite Enhanced and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhanced position performs unexpectedly, Growth Strategy 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 Strategy will offset losses from the drop in Growth Strategy's long position.| Enhanced vs. Us Micro Cap | Enhanced vs. Dfa Short Term Government | Enhanced vs. Emerging Markets Small | Enhanced vs. Dfa One Year Fixed |
| Growth Strategy vs. Enhanced Large Pany | Growth Strategy vs. Touchstone Large Cap | Growth Strategy vs. Strategic Allocation Aggressive | Growth Strategy vs. Alternative Asset Allocation |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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