Correlation Between Growth Strategy and Parametric Intl
Can any of the company-specific risk be diversified away by investing in both Growth Strategy and Parametric Intl 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 Parametric Intl 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 Parametric Intl Equity, you can compare the effects of market volatilities on Growth Strategy and Parametric Intl 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 Parametric Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Strategy and Parametric Intl.
Diversification Opportunities for Growth Strategy and Parametric Intl
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Growth and Parametric is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and Parametric Intl Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parametric Intl Equity 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 Parametric Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parametric Intl Equity has no effect on the direction of Growth Strategy i.e., Growth Strategy and Parametric Intl go up and down completely randomly.
Pair Corralation between Growth Strategy and Parametric Intl
Assuming the 90 days horizon Growth Strategy is expected to generate 4.94 times less return on investment than Parametric Intl. But when comparing it to its historical volatility, Growth Strategy Fund is 1.42 times less risky than Parametric Intl. It trades about 0.01 of its potential returns per unit of risk. Parametric Intl Equity is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,460 in Parametric Intl Equity on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Parametric Intl Equity or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Growth Strategy Fund vs. Parametric Intl Equity
Performance |
| Timeline |
| Growth Strategy |
| Parametric Intl Equity |
Growth Strategy and Parametric Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Strategy and Parametric Intl
The main advantage of trading using opposite Growth Strategy and Parametric Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Strategy position performs unexpectedly, Parametric Intl 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 Parametric Intl will offset losses from the drop in Parametric Intl'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 |
| Parametric Intl vs. Washington Mutual Investors | Parametric Intl vs. Aqr Large Cap | Parametric Intl vs. Rational Strategic Allocation | Parametric Intl vs. Qs Large Cap |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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