Correlation Between Growth Strategy and Black Oak
Can any of the company-specific risk be diversified away by investing in both Growth Strategy and Black Oak 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 Black Oak 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 Black Oak Emerging, you can compare the effects of market volatilities on Growth Strategy and Black Oak 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 Black Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Strategy and Black Oak.
Diversification Opportunities for Growth Strategy and Black Oak
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Growth and Black is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and Black Oak Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Oak Emerging 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 Black Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Oak Emerging has no effect on the direction of Growth Strategy i.e., Growth Strategy and Black Oak go up and down completely randomly.
Pair Corralation between Growth Strategy and Black Oak
Assuming the 90 days horizon Growth Strategy Fund is expected to generate 0.56 times more return on investment than Black Oak. However, Growth Strategy Fund is 1.78 times less risky than Black Oak. It trades about 0.19 of its potential returns per unit of risk. Black Oak Emerging is currently generating about 0.04 per unit of risk. If you would invest 1,261 in Growth Strategy Fund on November 5, 2024 and sell it today you would earn a total of 29.00 from holding Growth Strategy Fund or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Strategy Fund vs. Black Oak Emerging
Performance |
| Timeline |
| Growth Strategy |
| Black Oak Emerging |
Growth Strategy and Black Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Strategy and Black Oak
The main advantage of trading using opposite Growth Strategy and Black Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Strategy position performs unexpectedly, Black Oak 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 Black Oak will offset losses from the drop in Black Oak's long position.| Growth Strategy vs. Health Care Ultrasector | Growth Strategy vs. Eaton Vance Worldwide | Growth Strategy vs. Alphacentric Lifesci Healthcare | Growth Strategy vs. Highland Longshort Healthcare |
| Black Oak vs. Red Oak Technology | Black Oak vs. Pin Oak Equity | Black Oak vs. White Oak Select | Black Oak vs. Live Oak Health |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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