Correlation Between Growth Fund and Investment
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Investment 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 Investment 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 Investment Of America, you can compare the effects of market volatilities on Growth Fund and Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Investment.
Diversification Opportunities for Growth Fund and Investment
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Growth and Investment is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Investment Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Of America 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Of America has no effect on the direction of Growth Fund i.e., Growth Fund and Investment go up and down completely randomly.
Pair Corralation between Growth Fund and Investment
Assuming the 90 days horizon Growth Fund Of is expected to generate 1.21 times more return on investment than Investment. However, Growth Fund is 1.21 times more volatile than Investment Of America. It trades about 0.17 of its potential returns per unit of risk. Investment Of America is currently generating about 0.11 per unit of risk. If you would invest 7,834 in Growth Fund Of on August 31, 2024 and sell it today you would earn a total of 281.00 from holding Growth Fund Of or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Investment Of America
Performance |
| Timeline |
| Growth Fund |
| Investment Of America |
Growth Fund and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Investment
The main advantage of trading using opposite Growth Fund and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Investment 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 Investment will offset losses from the drop in Investment's long position.| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Capital World Growth | Growth Fund vs. American Funds Fundamental | Growth Fund vs. Washington Mutual Investors |
| Investment vs. Vanguard Total Stock | Investment vs. Vanguard 500 Index | Investment vs. Vanguard Total Stock | Investment vs. Vanguard Total Stock |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |