Correlation Between International Equity and Growth Fund
Can any of the company-specific risk be diversified away by investing in both International Equity and Growth Fund 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 International Equity and Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Equity Fund and Growth Fund Growth, you can compare the effects of market volatilities on International Equity and Growth Fund 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 International Equity with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Equity and Growth Fund.
Diversification Opportunities for International Equity and Growth Fund
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between International and Growth is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding International Equity Fund and Growth Fund Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund Growth and International Equity 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 International Equity Fund are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund Growth has no effect on the direction of International Equity i.e., International Equity and Growth Fund go up and down completely randomly.
Pair Corralation between International Equity and Growth Fund
Assuming the 90 days horizon International Equity Fund is expected to under-perform the Growth Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, International Equity Fund is 1.08 times less risky than Growth Fund. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Growth Fund Growth is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,852 in Growth Fund Growth on September 1, 2024 and sell it today you would earn a total of 123.00 from holding Growth Fund Growth or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Equity Fund vs. Growth Fund Growth
Performance |
| Timeline |
| International Equity |
| Growth Fund Growth |
International Equity and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Equity and Growth Fund
The main advantage of trading using opposite International Equity and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Equity position performs unexpectedly, Growth Fund 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 Fund will offset losses from the drop in Growth Fund's long position.| International Equity vs. Homestead Rural America | International Equity vs. Small Company Stock Fund | International Equity vs. Stock Index Fund | International Equity vs. Homestead Funds |
| Growth Fund vs. Value Fund Value | Growth Fund vs. Stock Index Fund | Growth Fund vs. Small Company Stock Fund | Growth Fund vs. International Equity 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |