Correlation Between Financial Industries and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Financial Industries 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 Financial Industries and Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Financial Industries Fund and Growth Fund Of, you can compare the effects of market volatilities on Financial Industries 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 Financial Industries with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Growth Fund.
Diversification Opportunities for Financial Industries and Growth Fund
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Financial and Growth is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund and Financial Industries 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 Financial Industries 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 has no effect on the direction of Financial Industries i.e., Financial Industries and Growth Fund go up and down completely randomly.
Pair Corralation between Financial Industries and Growth Fund
Assuming the 90 days horizon Financial Industries Fund is expected to under-perform the Growth Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Financial Industries Fund is 1.36 times less risky than Growth Fund. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Growth Fund Of is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 7,093 in Growth Fund Of on November 27, 2024 and sell it today you would lose (574.00) from holding Growth Fund Of or give up 8.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Industries Fund vs. Growth Fund Of
Performance |
| Timeline |
| Financial Industries |
| Growth Fund |
Financial Industries and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Growth Fund
The main advantage of trading using opposite Financial Industries and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries 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.| Financial Industries vs. Ashmore Emerging Markets | Financial Industries vs. Nuveen Small Cap | Financial Industries vs. Astoncrosswind Small Cap | Financial Industries vs. Glg Intl Small |
| Growth Fund vs. Aqr Sustainable Long Short | Growth Fund vs. Goldman Sachs Emerging | Growth Fund vs. Legg Mason Western | Growth Fund vs. Calvert Developed Market |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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