Correlation Between Growth Fund and Capital World
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Capital World 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 Growth Fund and Capital World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Capital World Bond, you can compare the effects of market volatilities on Growth Fund and Capital World 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 Growth Fund with a short position of Capital World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Capital World.
Diversification Opportunities for Growth Fund and Capital World
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Growth and Capital is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Capital World Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital World Bond and Growth Fund 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 Growth Fund Of are associated (or correlated) with Capital World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital World Bond has no effect on the direction of Growth Fund i.e., Growth Fund and Capital World go up and down completely randomly.
Pair Corralation between Growth Fund and Capital World
Assuming the 90 days horizon Growth Fund Of is expected to generate 2.37 times more return on investment than Capital World. However, Growth Fund is 2.37 times more volatile than Capital World Bond. It trades about 0.1 of its potential returns per unit of risk. Capital World Bond is currently generating about 0.01 per unit of risk. If you would invest 4,455 in Growth Fund Of on August 31, 2024 and sell it today you would earn a total of 2,628 from holding Growth Fund Of or generate 58.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Capital World Bond
Performance |
| Timeline |
| Growth Fund |
| Capital World Bond |
Growth Fund and Capital World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Capital World
The main advantage of trading using opposite Growth Fund and Capital World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Capital World 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 Capital World will offset losses from the drop in Capital World's long position.| Growth Fund vs. Fidelity Managed Retirement | Growth Fund vs. Franklin Lifesmart Retirement | Growth Fund vs. Pro Blend Moderate Term | Growth Fund vs. Franklin Lifesmart Retirement |
| Capital World vs. Pioneer High Yield | Capital World vs. Aqr Risk Balanced Modities | Capital World vs. T Rowe Price | Capital World vs. Lgm Risk Managed |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |