Correlation Between Europac Gold and Growth Strategy

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Can any of the company-specific risk be diversified away by investing in both Europac Gold and Growth Strategy 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 Growth Strategy 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 Growth Strategy Fund, you can compare the effects of market volatilities on Europac Gold and Growth Strategy 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 Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europac Gold and Growth Strategy.

Diversification Opportunities for Europac Gold and Growth Strategy

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Europac and Growth is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy 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 Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of Europac Gold i.e., Europac Gold and Growth Strategy go up and down completely randomly.

Pair Corralation between Europac Gold and Growth Strategy

Assuming the 90 days horizon Europac Gold Fund is expected to under-perform the Growth Strategy. In addition to that, Europac Gold is 4.27 times more volatile than Growth Strategy Fund. It trades about -0.06 of its total potential returns per unit of risk. Growth Strategy Fund is currently generating about 0.12 per unit of volatility. If you would invest  1,291  in Growth Strategy Fund on September 12, 2024 and sell it today you would earn a total of  48.00  from holding Growth Strategy Fund or generate 3.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Europac Gold Fund  vs.  Growth Strategy Fund

 Performance 
       Timeline  
Europac Gold 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Europac Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
Growth Strategy 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Growth Strategy Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Growth Strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Europac Gold and Growth Strategy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Europac Gold and Growth Strategy

The main advantage of trading using opposite Europac Gold and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europac Gold position performs unexpectedly, Growth Strategy 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 Growth Strategy will offset losses from the drop in Growth Strategy's long position.
The idea behind Europac Gold Fund and Growth Strategy Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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