Correlation Between Growth Strategy and One Choice
Can any of the company-specific risk be diversified away by investing in both Growth Strategy and One Choice 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 One Choice 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 One Choice 2050, you can compare the effects of market volatilities on Growth Strategy and One Choice 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 One Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Strategy and One Choice.
Diversification Opportunities for Growth Strategy and One Choice
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and One is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and One Choice 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice 2050 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 One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice 2050 has no effect on the direction of Growth Strategy i.e., Growth Strategy and One Choice go up and down completely randomly.
Pair Corralation between Growth Strategy and One Choice
Assuming the 90 days horizon Growth Strategy Fund is expected to generate 0.99 times more return on investment than One Choice. However, Growth Strategy Fund is 1.01 times less risky than One Choice. It trades about 0.1 of its potential returns per unit of risk. One Choice 2050 is currently generating about 0.07 per unit of risk. If you would invest 899.00 in Growth Strategy Fund on September 12, 2024 and sell it today you would earn a total of 305.00 from holding Growth Strategy Fund or generate 33.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Growth Strategy Fund vs. One Choice 2050
Performance |
| Timeline |
| Growth Strategy |
| One Choice 2050 |
Growth Strategy and One Choice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Strategy and One Choice
The main advantage of trading using opposite Growth Strategy and One Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Strategy position performs unexpectedly, One Choice 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 One Choice will offset losses from the drop in One Choice's long position.| Growth Strategy vs. Smallcap Growth Fund | Growth Strategy vs. T Rowe Price | Growth Strategy vs. L Abbett Growth | Growth Strategy vs. Rational Defensive Growth |
| One Choice vs. Vanguard Target Retirement | One Choice vs. American Funds 2050 | One Choice vs. HUMANA INC | One Choice vs. Barloworld Ltd ADR |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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