Correlation Between Growth Fund and F/m Investments
Can any of the company-specific risk be diversified away by investing in both Growth Fund and F/m Investments 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 F/m Investments 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 Fm Investments Large, you can compare the effects of market volatilities on Growth Fund and F/m Investments 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 F/m Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and F/m Investments.
Diversification Opportunities for Growth Fund and F/m Investments
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Growth and F/m is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Fm Investments Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fm Investments Large 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 F/m Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fm Investments Large has no effect on the direction of Growth Fund i.e., Growth Fund and F/m Investments go up and down completely randomly.
Pair Corralation between Growth Fund and F/m Investments
Assuming the 90 days horizon Growth Fund is expected to generate 1.1 times less return on investment than F/m Investments. But when comparing it to its historical volatility, Growth Fund Of is 1.12 times less risky than F/m Investments. It trades about 0.1 of its potential returns per unit of risk. Fm Investments Large is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,421 in Fm Investments Large on August 29, 2024 and sell it today you would earn a total of 462.00 from holding Fm Investments Large or generate 32.51% 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. Fm Investments Large
Performance |
| Timeline |
| Growth Fund |
| Fm Investments Large |
Growth Fund and F/m Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and F/m Investments
The main advantage of trading using opposite Growth Fund and F/m Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, F/m Investments 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 F/m Investments will offset losses from the drop in F/m Investments' long position.| Growth Fund vs. Income Fund Of | Growth Fund vs. New World Fund | Growth Fund vs. American Mutual Fund | Growth Fund vs. American Mutual 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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