Correlation Between Europac Gold and Europacific Growth
Can any of the company-specific risk be diversified away by investing in both Europac Gold 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 Europac Gold and Europacific Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europac Gold Fund and Europacific Growth Fund, you can compare the effects of market volatilities on Europac Gold 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 Europac Gold with a short position of Europacific Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europac Gold and Europacific Growth.
Diversification Opportunities for Europac Gold and Europacific Growth
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Europac and Europacific is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold 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 Europac Gold 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 Europac Gold 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 Europac Gold i.e., Europac Gold and Europacific Growth go up and down completely randomly.
Pair Corralation between Europac Gold and Europacific Growth
Assuming the 90 days horizon Europac Gold Fund is expected to generate 2.06 times more return on investment than Europacific Growth. However, Europac Gold is 2.06 times more volatile than Europacific Growth Fund. It trades about 0.01 of its potential returns per unit of risk. Europacific Growth Fund is currently generating about 0.01 per unit of risk. If you would invest 931.00 in Europac Gold Fund on October 23, 2024 and sell it today you would earn a total of 34.00 from holding Europac Gold Fund or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Europac Gold Fund vs. Europacific Growth Fund
Performance |
| Timeline |
| Europac Gold |
| Europacific Growth |
Europac Gold and Europacific Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europac Gold and Europacific Growth
The main advantage of trading using opposite Europac Gold and Europacific Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europac Gold 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.| Europac Gold vs. Europac International Value | Europac Gold vs. Europac International Dividend | Europac Gold vs. Ep Emerging Markets | Europac Gold vs. Europac International Bond |
| Europacific Growth vs. Short Duration Inflation | Europacific Growth vs. Credit Suisse Managed | Europacific Growth vs. Guidepath Managed Futures | Europacific Growth vs. Fidelity Sai Inflationfocused |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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