Correlation Between Growth Strategy and International Developed
Can any of the company-specific risk be diversified away by investing in both Growth Strategy and International Developed 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 International Developed 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 International Developed Markets, you can compare the effects of market volatilities on Growth Strategy and International Developed 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 International Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Strategy and International Developed.
Diversification Opportunities for Growth Strategy and International Developed
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Growth and International is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and International Developed Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Developed 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 International Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Developed has no effect on the direction of Growth Strategy i.e., Growth Strategy and International Developed go up and down completely randomly.
Pair Corralation between Growth Strategy and International Developed
Assuming the 90 days horizon Growth Strategy Fund is expected to generate 0.79 times more return on investment than International Developed. However, Growth Strategy Fund is 1.27 times less risky than International Developed. It trades about 0.09 of its potential returns per unit of risk. International Developed Markets is currently generating about -0.19 per unit of risk. If you would invest 1,312 in Growth Strategy Fund on August 25, 2024 and sell it today you would earn a total of 14.00 from holding Growth Strategy Fund or generate 1.07% 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. International Developed Market
Performance |
| Timeline |
| Growth Strategy |
| International Developed |
Growth Strategy and International Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Strategy and International Developed
The main advantage of trading using opposite Growth Strategy and International Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Strategy position performs unexpectedly, International Developed 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 International Developed will offset losses from the drop in International Developed's long position.| Growth Strategy vs. International Developed Markets | Growth Strategy vs. Global Real Estate | Growth Strategy vs. Global Real Estate | Growth Strategy 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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