Correlation Between Spectrum International and Spectrum Growth
Can any of the company-specific risk be diversified away by investing in both Spectrum International and Spectrum 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 Spectrum International and Spectrum Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectrum International Fund and Spectrum Growth Fund, you can compare the effects of market volatilities on Spectrum International and Spectrum 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 Spectrum International with a short position of Spectrum Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum International and Spectrum Growth.
Diversification Opportunities for Spectrum International and Spectrum Growth
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spectrum and Spectrum is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum International Fund and Spectrum Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectrum Growth and Spectrum International 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 Spectrum International Fund are associated (or correlated) with Spectrum Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectrum Growth has no effect on the direction of Spectrum International i.e., Spectrum International and Spectrum Growth go up and down completely randomly.
Pair Corralation between Spectrum International and Spectrum Growth
Assuming the 90 days horizon Spectrum International is expected to generate 1.05 times less return on investment than Spectrum Growth. But when comparing it to its historical volatility, Spectrum International Fund is 1.12 times less risky than Spectrum Growth. It trades about 0.17 of its potential returns per unit of risk. Spectrum Growth Fund is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,579 in Spectrum Growth Fund on October 24, 2024 and sell it today you would earn a total of 59.00 from holding Spectrum Growth Fund or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spectrum International Fund vs. Spectrum Growth Fund
Performance |
| Timeline |
| Spectrum International |
| Spectrum Growth |
Spectrum International and Spectrum Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spectrum International and Spectrum Growth
The main advantage of trading using opposite Spectrum International and Spectrum Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum International position performs unexpectedly, Spectrum 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 Spectrum Growth will offset losses from the drop in Spectrum Growth's long position.| Spectrum International vs. T Rowe Price | Spectrum International vs. Spectrum Growth Fund | Spectrum International vs. Spectrum Income Fund | Spectrum International vs. T Rowe Price |
| Spectrum Growth vs. Spectrum Income Fund | Spectrum Growth vs. Spectrum International Fund | Spectrum Growth vs. T Rowe Price | Spectrum Growth vs. T Rowe Price |
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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