Correlation Between Short-term Treasury and Aggressive Growth
Can any of the company-specific risk be diversified away by investing in both Short-term Treasury and Aggressive Growth 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 Short-term Treasury and Aggressive Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Term Treasury Portfolio and Aggressive Growth Portfolio, you can compare the effects of market volatilities on Short-term Treasury and Aggressive Growth 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 Short-term Treasury with a short position of Aggressive Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short-term Treasury and Aggressive Growth.
Diversification Opportunities for Short-term Treasury and Aggressive Growth
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Short-term and AGGRESSIVE is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Treasury Portfolio and Aggressive Growth Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Growth and Short-term Treasury 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 Short Term Treasury Portfolio are associated (or correlated) with Aggressive Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Growth has no effect on the direction of Short-term Treasury i.e., Short-term Treasury and Aggressive Growth go up and down completely randomly.
Pair Corralation between Short-term Treasury and Aggressive Growth
If you would invest 6,514 in Short Term Treasury Portfolio on November 9, 2024 and sell it today you would earn a total of 22.00 from holding Short Term Treasury Portfolio or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 5.0% |
| Values | Daily Returns |
Short Term Treasury Portfolio vs. Aggressive Growth Portfolio
Performance |
| Timeline |
| Short Term Treasury |
| Aggressive Growth |
Risk-Adjusted Performance
Good
Weak | Strong |
Short-term Treasury and Aggressive Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short-term Treasury and Aggressive Growth
The main advantage of trading using opposite Short-term Treasury and Aggressive Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short-term Treasury position performs unexpectedly, Aggressive Growth 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 Aggressive Growth will offset losses from the drop in Aggressive Growth's long position.| Short-term Treasury vs. Versatile Bond Portfolio | Short-term Treasury vs. Aggressive Growth Portfolio | Short-term Treasury vs. Permanent Portfolio Class | Short-term Treasury vs. Payden Limited Maturity |
| Aggressive Growth vs. Tax Managed International Equity | Aggressive Growth vs. Artisan Select Equity | Aggressive Growth vs. Gmo Global Equity | Aggressive Growth vs. Rbc China Equity |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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