Correlation Between Growth Strategy and Salient Investment
Can any of the company-specific risk be diversified away by investing in both Growth Strategy and Salient Investment 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 Strategy and Salient Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Strategy Fund and Salient Investment Grade, you can compare the effects of market volatilities on Growth Strategy and Salient Investment 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 Strategy with a short position of Salient Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Strategy and Salient Investment.
Diversification Opportunities for Growth Strategy and Salient Investment
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Growth and Salient is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and Salient Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Investment Grade and Growth Strategy 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 Strategy Fund are associated (or correlated) with Salient Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Investment Grade has no effect on the direction of Growth Strategy i.e., Growth Strategy and Salient Investment go up and down completely randomly.
Pair Corralation between Growth Strategy and Salient Investment
Assuming the 90 days horizon Growth Strategy Fund is expected to under-perform the Salient Investment. But the mutual fund apears to be less risky and, when comparing its historical volatility, Growth Strategy Fund is 2.37 times less risky than Salient Investment. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Salient Investment Grade is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,308 in Salient Investment Grade on October 26, 2024 and sell it today you would earn a total of 104.00 from holding Salient Investment Grade or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Strategy Fund vs. Salient Investment Grade
Performance |
| Timeline |
| Growth Strategy |
| Salient Investment Grade |
Growth Strategy and Salient Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Strategy and Salient Investment
The main advantage of trading using opposite Growth Strategy and Salient Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Strategy position performs unexpectedly, Salient Investment 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 Salient Investment will offset losses from the drop in Salient Investment's long position.| Growth Strategy vs. Vy T Rowe | Growth Strategy vs. Northern Small Cap | Growth Strategy vs. Tiaa Cref Small Cap Blend | Growth Strategy vs. Madison Diversified Income |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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