Correlation Between Edgewood Growth and Undiscovered Managers
Can any of the company-specific risk be diversified away by investing in both Edgewood Growth and Undiscovered Managers 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 Undiscovered Managers 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 Undiscovered Managers Behavioral, you can compare the effects of market volatilities on Edgewood Growth and Undiscovered Managers 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 Undiscovered Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgewood Growth and Undiscovered Managers.
Diversification Opportunities for Edgewood Growth and Undiscovered Managers
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Edgewood and Undiscovered is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Edgewood Growth Fund and Undiscovered Managers Behavior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Undiscovered Managers 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 Undiscovered Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Undiscovered Managers has no effect on the direction of Edgewood Growth i.e., Edgewood Growth and Undiscovered Managers go up and down completely randomly.
Pair Corralation between Edgewood Growth and Undiscovered Managers
Assuming the 90 days horizon Edgewood Growth Fund is expected to under-perform the Undiscovered Managers. In addition to that, Edgewood Growth is 1.63 times more volatile than Undiscovered Managers Behavioral. It trades about -0.02 of its total potential returns per unit of risk. Undiscovered Managers Behavioral is currently generating about 0.02 per unit of volatility. If you would invest 8,485 in Undiscovered Managers Behavioral on October 22, 2024 and sell it today you would earn a total of 149.00 from holding Undiscovered Managers Behavioral or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edgewood Growth Fund vs. Undiscovered Managers Behavior
Performance |
| Timeline |
| Edgewood Growth |
| Undiscovered Managers |
Edgewood Growth and Undiscovered Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edgewood Growth and Undiscovered Managers
The main advantage of trading using opposite Edgewood Growth and Undiscovered Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewood Growth position performs unexpectedly, Undiscovered Managers 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 Undiscovered Managers will offset losses from the drop in Undiscovered Managers' 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 |
| Undiscovered Managers vs. Jpmorgan Small Cap | Undiscovered Managers vs. Hartford Schroders Emerging | Undiscovered Managers vs. Diamond Hill Large | Undiscovered Managers vs. Edgewood Growth Fund |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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