Correlation Between Growth Allocation and Auer Growth
Can any of the company-specific risk be diversified away by investing in both Growth Allocation and Auer Growth 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 Allocation and Auer Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Allocation Fund and Auer Growth Fund, you can compare the effects of market volatilities on Growth Allocation and Auer Growth 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 Allocation with a short position of Auer Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Allocation and Auer Growth.
Diversification Opportunities for Growth Allocation and Auer Growth
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and Auer is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Growth Allocation Fund and Auer Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auer Growth Fund and Growth Allocation 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 Allocation Fund are associated (or correlated) with Auer Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auer Growth Fund has no effect on the direction of Growth Allocation i.e., Growth Allocation and Auer Growth go up and down completely randomly.
Pair Corralation between Growth Allocation and Auer Growth
Assuming the 90 days horizon Growth Allocation is expected to generate 1.9 times less return on investment than Auer Growth. But when comparing it to its historical volatility, Growth Allocation Fund is 1.78 times less risky than Auer Growth. It trades about 0.17 of its potential returns per unit of risk. Auer Growth Fund is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,699 in Auer Growth Fund on August 31, 2024 and sell it today you would earn a total of 69.00 from holding Auer Growth Fund or generate 4.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Growth Allocation Fund vs. Auer Growth Fund
Performance |
| Timeline |
| Growth Allocation |
| Auer Growth Fund |
Growth Allocation and Auer Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Allocation and Auer Growth
The main advantage of trading using opposite Growth Allocation and Auer Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Allocation position performs unexpectedly, Auer Growth 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 Auer Growth will offset losses from the drop in Auer Growth's long position.| Growth Allocation vs. Alpine High Yield | Growth Allocation vs. Western Asset High | Growth Allocation vs. Metropolitan West High | Growth Allocation vs. Virtus High Yield |
| Auer Growth vs. Lebenthal Lisanti Small | Auer Growth vs. Hodges Small Cap | Auer Growth vs. Schwartz Value Focused | Auer Growth vs. Oberweis Small Cap Opportunities |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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