Correlation Between The Emerging and Growth Strategy
Can any of the company-specific risk be diversified away by investing in both The Emerging and Growth Strategy 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 The Emerging and Growth Strategy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Emerging Markets and Growth Strategy Fund, you can compare the effects of market volatilities on The Emerging and Growth Strategy 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 The Emerging with a short position of Growth Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Emerging and Growth Strategy.
Diversification Opportunities for The Emerging and Growth Strategy
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between The and Growth is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding The Emerging Markets and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy and The Emerging 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 The Emerging Markets are associated (or correlated) with Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of The Emerging i.e., The Emerging and Growth Strategy go up and down completely randomly.
Pair Corralation between The Emerging and Growth Strategy
Assuming the 90 days horizon The Emerging Markets is expected to under-perform the Growth Strategy. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Emerging Markets is 1.0 times less risky than Growth Strategy. The mutual fund trades about -0.32 of its potential returns per unit of risk. The Growth Strategy Fund is currently generating about -0.29 of returns per unit of risk over similar time horizon. If you would invest 1,142 in Growth Strategy Fund on January 8, 2025 and sell it today you would lose (100.00) from holding Growth Strategy Fund or give up 8.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Emerging Markets vs. Growth Strategy Fund
Performance |
| Timeline |
| Emerging Markets |
| Growth Strategy |
The Emerging and Growth Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Emerging and Growth Strategy
The main advantage of trading using opposite The Emerging and Growth Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Emerging position performs unexpectedly, Growth Strategy 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 Strategy will offset losses from the drop in Growth Strategy's long position.| The Emerging vs. Ab Bond Inflation | The Emerging vs. Doubleline E Fixed | The Emerging vs. Scout E Bond | The Emerging vs. Intermediate Bond Fund |
| Growth Strategy vs. Franklin Mutual Global | Growth Strategy vs. Barings Global Floating | Growth Strategy vs. Ab Global Bond | Growth Strategy vs. Goldman Sachs Global |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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