Correlation Between Edgewood Growth and Pear Tree
Can any of the company-specific risk be diversified away by investing in both Edgewood Growth and Pear Tree 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 Pear Tree 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 Pear Tree Polaris, you can compare the effects of market volatilities on Edgewood Growth and Pear Tree 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 Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgewood Growth and Pear Tree.
Diversification Opportunities for Edgewood Growth and Pear Tree
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Edgewood and Pear is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Edgewood Growth Fund and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris 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 Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of Edgewood Growth i.e., Edgewood Growth and Pear Tree go up and down completely randomly.
Pair Corralation between Edgewood Growth and Pear Tree
Assuming the 90 days horizon Edgewood Growth Fund is expected to generate 1.3 times more return on investment than Pear Tree. However, Edgewood Growth is 1.3 times more volatile than Pear Tree Polaris. It trades about 0.13 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about -0.15 per unit of risk. If you would invest 5,228 in Edgewood Growth Fund on August 30, 2024 and sell it today you would earn a total of 153.00 from holding Edgewood Growth Fund or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Edgewood Growth Fund vs. Pear Tree Polaris
Performance |
| Timeline |
| Edgewood Growth |
| Pear Tree Polaris |
Edgewood Growth and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edgewood Growth and Pear Tree
The main advantage of trading using opposite Edgewood Growth and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewood Growth position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.| Edgewood Growth vs. John Hancock Disciplined | Edgewood Growth vs. Diamond Hill Large | Edgewood Growth vs. Hartford Schroders Emerging | Edgewood Growth vs. Oakmark International Fund |
| Pear Tree vs. Wasatch E Growth | Pear Tree vs. Tcw E Fixed | Pear Tree vs. Tcw Relative Value | Pear Tree vs. Pax High Yield |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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