Correlation Between International Stock and Europacific Growth
Can any of the company-specific risk be diversified away by investing in both International Stock and Europacific 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 International Stock and Europacific Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Stock Fund and Europacific Growth Fund, you can compare the effects of market volatilities on International Stock and Europacific 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 International Stock with a short position of Europacific Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Stock and Europacific Growth.
Diversification Opportunities for International Stock and Europacific Growth
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between International and Europacific is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding International Stock Fund and Europacific Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europacific Growth and International Stock 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 International Stock Fund are associated (or correlated) with Europacific Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europacific Growth has no effect on the direction of International Stock i.e., International Stock and Europacific Growth go up and down completely randomly.
Pair Corralation between International Stock and Europacific Growth
Assuming the 90 days horizon International Stock Fund is expected to under-perform the Europacific Growth. In addition to that, International Stock is 1.11 times more volatile than Europacific Growth Fund. It trades about -0.03 of its total potential returns per unit of risk. Europacific Growth Fund is currently generating about 0.01 per unit of volatility. If you would invest 5,842 in Europacific Growth Fund on September 12, 2024 and sell it today you would earn a total of 4.00 from holding Europacific Growth Fund or generate 0.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Stock Fund vs. Europacific Growth Fund
Performance |
| Timeline |
| International Stock |
| Europacific Growth |
International Stock and Europacific Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Stock and Europacific Growth
The main advantage of trading using opposite International Stock and Europacific Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Stock position performs unexpectedly, Europacific 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 Europacific Growth will offset losses from the drop in Europacific Growth's long position.| International Stock vs. Europacific Growth Fund | International Stock vs. SCOR PK | International Stock vs. Morningstar Unconstrained Allocation | International Stock vs. Thrivent High Yield |
| Europacific Growth vs. Alliancebernstein National Municipal | Europacific Growth vs. Pace High Yield | Europacific Growth vs. Morningstar Defensive Bond | Europacific Growth vs. Versatile Bond Portfolio |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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