Correlation Between Edgewood Growth and Polen Growth
Can any of the company-specific risk be diversified away by investing in both Edgewood Growth and Polen 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 Edgewood Growth and Polen Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edgewood Growth Fund and Polen Growth Fund, you can compare the effects of market volatilities on Edgewood Growth and Polen 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 Edgewood Growth with a short position of Polen Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgewood Growth and Polen Growth.
Diversification Opportunities for Edgewood Growth and Polen Growth
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Edgewood and Polen is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Edgewood Growth Fund and Polen Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Growth and Edgewood Growth 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 Edgewood Growth Fund are associated (or correlated) with Polen Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Growth has no effect on the direction of Edgewood Growth i.e., Edgewood Growth and Polen Growth go up and down completely randomly.
Pair Corralation between Edgewood Growth and Polen Growth
Assuming the 90 days horizon Edgewood Growth is expected to generate 1.24 times less return on investment than Polen Growth. In addition to that, Edgewood Growth is 1.24 times more volatile than Polen Growth Fund. It trades about 0.06 of its total potential returns per unit of risk. Polen Growth Fund is currently generating about 0.09 per unit of volatility. If you would invest 3,020 in Polen Growth Fund on August 30, 2024 and sell it today you would earn a total of 1,803 from holding Polen Growth Fund or generate 59.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edgewood Growth Fund vs. Polen Growth Fund
Performance |
| Timeline |
| Edgewood Growth |
| Polen Growth |
Edgewood Growth and Polen Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edgewood Growth and Polen Growth
The main advantage of trading using opposite Edgewood Growth and Polen Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewood Growth position performs unexpectedly, Polen 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 Polen Growth will offset losses from the drop in Polen Growth's long position.| Edgewood Growth vs. T Rowe Price | Edgewood Growth vs. T Rowe Price | Edgewood Growth vs. T Rowe Price | Edgewood Growth vs. T Rowe Price |
| Polen Growth vs. T Rowe Price | Polen Growth vs. T Rowe Price | Polen Growth vs. T Rowe Price | Polen Growth vs. T Rowe Price |
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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