Correlation Between Growth Portfolio and Select Fund
Can any of the company-specific risk be diversified away by investing in both Growth Portfolio and Select 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 Select 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 Select Fund I, you can compare the effects of market volatilities on Growth Portfolio and Select 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 Select Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Portfolio and Select Fund.
Diversification Opportunities for Growth Portfolio and Select Fund
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Growth and Select is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Growth Portfolio Class and Select Fund I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select 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 Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund I has no effect on the direction of Growth Portfolio i.e., Growth Portfolio and Select Fund go up and down completely randomly.
Pair Corralation between Growth Portfolio and Select Fund
Assuming the 90 days horizon Growth Portfolio Class is expected to generate 1.99 times more return on investment than Select Fund. However, Growth Portfolio is 1.99 times more volatile than Select Fund I. It trades about 0.36 of its potential returns per unit of risk. Select Fund I is currently generating about 0.14 per unit of risk. If you would invest 4,828 in Growth Portfolio Class on September 13, 2024 and sell it today you would earn a total of 590.00 from holding Growth Portfolio Class or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Portfolio Class vs. Select Fund I
Performance |
| Timeline |
| Growth Portfolio Class |
| Select Fund I |
Growth Portfolio and Select Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Portfolio and Select Fund
The main advantage of trading using opposite Growth Portfolio and Select Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Portfolio position performs unexpectedly, Select 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 Select Fund will offset losses from the drop in Select Fund's long position.| Growth Portfolio vs. Mid Cap Growth | Growth Portfolio vs. Small Pany Growth | Growth Portfolio vs. Morgan Stanley Multi | Growth Portfolio vs. Emerging Markets Portfolio |
| Select Fund vs. Growth Portfolio Class | Select Fund vs. Small Cap Growth | Select Fund vs. Brown Advisory Sustainable | Select 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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