Correlation Between Growth Fund and Edgewood Growth
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Edgewood 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 Fund and Edgewood Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Growth and Edgewood Growth Fund, you can compare the effects of market volatilities on Growth Fund and Edgewood 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 Fund with a short position of Edgewood Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Edgewood Growth.
Diversification Opportunities for Growth Fund and Edgewood Growth
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and Edgewood is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Growth and Edgewood Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewood Growth 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 Growth are associated (or correlated) with Edgewood Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewood Growth has no effect on the direction of Growth Fund i.e., Growth Fund and Edgewood Growth go up and down completely randomly.
Pair Corralation between Growth Fund and Edgewood Growth
Assuming the 90 days horizon Growth Fund Growth is expected to generate 0.98 times more return on investment than Edgewood Growth. However, Growth Fund Growth is 1.02 times less risky than Edgewood Growth. It trades about 0.09 of its potential returns per unit of risk. Edgewood Growth Fund is currently generating about 0.08 per unit of risk. If you would invest 1,763 in Growth Fund Growth on September 3, 2024 and sell it today you would earn a total of 224.00 from holding Growth Fund Growth or generate 12.71% 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 Growth vs. Edgewood Growth Fund
Performance |
| Timeline |
| Growth Fund Growth |
| Edgewood Growth |
Growth Fund and Edgewood Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Edgewood Growth
The main advantage of trading using opposite Growth Fund and Edgewood Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Edgewood 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 Edgewood Growth will offset losses from the drop in Edgewood Growth's long position.| 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 |
| Edgewood Growth vs. Edgewood Growth Fund | Edgewood Growth vs. Polen Growth Fund | Edgewood Growth vs. Doubleline Shiller Enhanced | Edgewood Growth vs. Parnassus Endeavor 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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