Correlation Between Growth Portfolio and International Advantage
Can any of the company-specific risk be diversified away by investing in both Growth Portfolio and International Advantage 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 Portfolio and International Advantage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Portfolio Class and International Advantage Portfolio, you can compare the effects of market volatilities on Growth Portfolio and International Advantage 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 Portfolio with a short position of International Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Portfolio and International Advantage.
Diversification Opportunities for Growth Portfolio and International Advantage
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Growth and International is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Growth Portfolio Class and International Advantage Portfo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Advantage and Growth Portfolio 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 Portfolio Class are associated (or correlated) with International Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Advantage has no effect on the direction of Growth Portfolio i.e., Growth Portfolio and International Advantage go up and down completely randomly.
Pair Corralation between Growth Portfolio and International Advantage
Assuming the 90 days horizon Growth Portfolio Class is expected to generate 1.66 times more return on investment than International Advantage. However, Growth Portfolio is 1.66 times more volatile than International Advantage Portfolio. It trades about 0.1 of its potential returns per unit of risk. International Advantage Portfolio is currently generating about 0.03 per unit of risk. If you would invest 2,950 in Growth Portfolio Class on August 31, 2024 and sell it today you would earn a total of 2,288 from holding Growth Portfolio Class or generate 77.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Growth Portfolio Class vs. International Advantage Portfo
Performance |
| Timeline |
| Growth Portfolio Class |
| International Advantage |
Growth Portfolio and International Advantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Portfolio and International Advantage
The main advantage of trading using opposite Growth Portfolio and International Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Portfolio position performs unexpectedly, International Advantage 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 International Advantage will offset losses from the drop in International Advantage's long position.| Growth Portfolio vs. Mid Cap Growth | Growth Portfolio vs. Morgan Stanley Multi | Growth Portfolio vs. Small Pany Growth | Growth Portfolio vs. Blackrock Science Technology |
| International Advantage vs. Europacific Growth Fund | International Advantage vs. Europacific Growth Fund | International Advantage vs. HUMANA INC | International Advantage vs. Aquagold International |
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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