Correlation Between Growth Portfolio and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Growth Portfolio 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 Growth Portfolio and Growth Fund 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 Growth Fund I, you can compare the effects of market volatilities on Growth Portfolio 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 Growth Portfolio with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Portfolio and Growth Fund.
Diversification Opportunities for Growth Portfolio and Growth Fund
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and Growth is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Growth Portfolio Class and Growth Fund I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund I 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 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 I has no effect on the direction of Growth Portfolio i.e., Growth Portfolio and Growth Fund go up and down completely randomly.
Pair Corralation between Growth Portfolio and Growth Fund
Assuming the 90 days horizon Growth Portfolio Class is expected to generate 1.49 times more return on investment than Growth Fund. However, Growth Portfolio is 1.49 times more volatile than Growth Fund I. It trades about 0.12 of its potential returns per unit of risk. Growth Fund I is currently generating about 0.08 per unit of risk. If you would invest 3,483 in Growth Portfolio Class on September 19, 2024 and sell it today you would earn a total of 2,035 from holding Growth Portfolio Class or generate 58.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Portfolio Class vs. Growth Fund I
Performance |
| Timeline |
| Growth Portfolio Class |
| Growth Fund I |
Growth Portfolio and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Portfolio and Growth Fund
The main advantage of trading using opposite Growth Portfolio and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Portfolio 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.| Growth Portfolio vs. Mid Cap Growth | Growth Portfolio vs. Morgan Stanley Multi | Growth Portfolio vs. Small Pany Growth | Growth Portfolio vs. Blackrock Science Technology |
| Growth Fund vs. Growth Portfolio Class | Growth Fund vs. Small Cap Growth | Growth Fund vs. Brown Advisory Sustainable | Growth Fund vs. Morgan Stanley Multi |
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 Directory module to find actively traded commodities issued by global exchanges.
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