Correlation Between Growth Fund and Sp 500
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Sp 500 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 Sp 500 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 Sp 500 Pure, you can compare the effects of market volatilities on Growth Fund and Sp 500 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 Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Sp 500.
Diversification Opportunities for Growth Fund and Sp 500
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Growth and RYAWX is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Sp 500 Pure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 Pure 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 Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 Pure has no effect on the direction of Growth Fund i.e., Growth Fund and Sp 500 go up and down completely randomly.
Pair Corralation between Growth Fund and Sp 500
Assuming the 90 days horizon Growth Fund is expected to generate 1.26 times less return on investment than Sp 500. But when comparing it to its historical volatility, Growth Fund Of is 1.25 times less risky than Sp 500. It trades about 0.23 of its potential returns per unit of risk. Sp 500 Pure is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 9,120 in Sp 500 Pure on September 12, 2024 and sell it today you would earn a total of 1,368 from holding Sp 500 Pure or generate 15.0% 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. Sp 500 Pure
Performance |
| Timeline |
| Growth Fund |
| Sp 500 Pure |
Growth Fund and Sp 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Sp 500
The main advantage of trading using opposite Growth Fund and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500'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 |
| Sp 500 vs. American Funds The | Sp 500 vs. American Funds The | Sp 500 vs. Growth Fund Of | Sp 500 vs. Growth Fund Of |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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