Correlation Between Growth Strategy and Us Small
Can any of the company-specific risk be diversified away by investing in both Growth Strategy and Us Small 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 Us Small 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 Us Small Cap, you can compare the effects of market volatilities on Growth Strategy and Us Small 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 Us Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Strategy and Us Small.
Diversification Opportunities for Growth Strategy and Us Small
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Growth and RLESX is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and Us Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Small Cap 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 Us Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Small Cap has no effect on the direction of Growth Strategy i.e., Growth Strategy and Us Small go up and down completely randomly.
Pair Corralation between Growth Strategy and Us Small
Assuming the 90 days horizon Growth Strategy is expected to generate 1.38 times less return on investment than Us Small. But when comparing it to its historical volatility, Growth Strategy Fund is 2.0 times less risky than Us Small. It trades about 0.15 of its potential returns per unit of risk. Us Small Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,296 in Us Small Cap on September 1, 2024 and sell it today you would earn a total of 835.00 from holding Us Small Cap or generate 36.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Growth Strategy Fund vs. Us Small Cap
Performance |
| Timeline |
| Growth Strategy |
| Us Small Cap |
Growth Strategy and Us Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Strategy and Us Small
The main advantage of trading using opposite Growth Strategy and Us Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Strategy position performs unexpectedly, Us Small 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 Us Small will offset losses from the drop in Us Small's long position.| Growth Strategy vs. Inflation Protected Bond Fund | Growth Strategy vs. Maryland Tax Free Bond | Growth Strategy vs. Oklahoma Municipal Fund | Growth Strategy vs. Transamerica Intermediate Muni |
| Us Small vs. International Developed Markets | Us Small vs. Global Real Estate | Us Small vs. Global Real Estate | Us Small vs. Global Real Estate |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |