Correlation Between Growth Portfolio and International Equity
Can any of the company-specific risk be diversified away by investing in both Growth Portfolio and International Equity 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 Equity 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 Equity Fund, you can compare the effects of market volatilities on Growth Portfolio and International Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Portfolio and International Equity.
Diversification Opportunities for Growth Portfolio and International Equity
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Growth and International is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Growth Portfolio Class and International Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Growth Portfolio i.e., Growth Portfolio and International Equity go up and down completely randomly.
Pair Corralation between Growth Portfolio and International Equity
Assuming the 90 days horizon Growth Portfolio Class is expected to generate 2.37 times more return on investment than International Equity. However, Growth Portfolio is 2.37 times more volatile than International Equity Fund. It trades about 0.09 of its potential returns per unit of risk. International Equity Fund is currently generating about 0.03 per unit of risk. If you would invest 2,784 in Growth Portfolio Class on October 11, 2024 and sell it today you would earn a total of 2,966 from holding Growth Portfolio Class or generate 106.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Growth Portfolio Class vs. International Equity Fund
Performance |
| Timeline |
| Growth Portfolio Class |
| International Equity |
Growth Portfolio and International Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Portfolio and International Equity
The main advantage of trading using opposite Growth Portfolio and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Portfolio position performs unexpectedly, International Equity 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 Equity will offset losses from the drop in International Equity'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 |
| International Equity vs. Invesco Stock Fund | International Equity vs. Invesco Equally Weighted Sp | International Equity vs. Growth Portfolio Class | International Equity 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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