Correlation Between Strategic Alternatives and Growth Equity
Can any of the company-specific risk be diversified away by investing in both Strategic Alternatives and Growth Equity 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 Strategic Alternatives and Growth Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Alternatives Fund and Growth Equity Investor, you can compare the effects of market volatilities on Strategic Alternatives and Growth Equity 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 Strategic Alternatives with a short position of Growth Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Alternatives and Growth Equity.
Diversification Opportunities for Strategic Alternatives and Growth Equity
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Strategic and Growth is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Alternatives Fund and Growth Equity Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Equity Investor and Strategic Alternatives 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 Strategic Alternatives Fund are associated (or correlated) with Growth Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Equity Investor has no effect on the direction of Strategic Alternatives i.e., Strategic Alternatives and Growth Equity go up and down completely randomly.
Pair Corralation between Strategic Alternatives and Growth Equity
Assuming the 90 days horizon Strategic Alternatives is expected to generate 2.28 times less return on investment than Growth Equity. But when comparing it to its historical volatility, Strategic Alternatives Fund is 4.42 times less risky than Growth Equity. It trades about 0.27 of its potential returns per unit of risk. Growth Equity Investor is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,887 in Growth Equity Investor on August 29, 2024 and sell it today you would earn a total of 94.00 from holding Growth Equity Investor or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Strategic Alternatives Fund vs. Growth Equity Investor
Performance |
| Timeline |
| Strategic Alternatives |
| Growth Equity Investor |
Strategic Alternatives and Growth Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Alternatives and Growth Equity
The main advantage of trading using opposite Strategic Alternatives and Growth Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Alternatives position performs unexpectedly, Growth Equity 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 Equity will offset losses from the drop in Growth Equity's long position.| Strategic Alternatives vs. Franklin Real Estate | Strategic Alternatives vs. Morgan Stanley Institutional | Strategic Alternatives vs. Forum Real Estate | Strategic Alternatives vs. Fidelity Advisor Real |
| Growth Equity vs. Highland Longshort Healthcare | Growth Equity vs. Deutsche Health And | Growth Equity vs. Baillie Gifford Health | Growth Equity vs. Alphacentric Lifesci Healthcare |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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