Correlation Between Growth Strategy and Financials Ultrasector
Can any of the company-specific risk be diversified away by investing in both Growth Strategy and Financials Ultrasector 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 Financials Ultrasector 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 Financials Ultrasector Profund, you can compare the effects of market volatilities on Growth Strategy and Financials Ultrasector 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 Financials Ultrasector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Strategy and Financials Ultrasector.
Diversification Opportunities for Growth Strategy and Financials Ultrasector
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Growth and Financials is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Growth Strategy Fund and Financials Ultrasector Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financials Ultrasector 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 Financials Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financials Ultrasector has no effect on the direction of Growth Strategy i.e., Growth Strategy and Financials Ultrasector go up and down completely randomly.
Pair Corralation between Growth Strategy and Financials Ultrasector
Assuming the 90 days horizon Growth Strategy is expected to generate 2.71 times less return on investment than Financials Ultrasector. But when comparing it to its historical volatility, Growth Strategy Fund is 2.07 times less risky than Financials Ultrasector. It trades about 0.1 of its potential returns per unit of risk. Financials Ultrasector Profund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,444 in Financials Ultrasector Profund on August 29, 2024 and sell it today you would earn a total of 2,114 from holding Financials Ultrasector Profund or generate 86.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Strategy Fund vs. Financials Ultrasector Profund
Performance |
| Timeline |
| Growth Strategy |
| Financials Ultrasector |
Growth Strategy and Financials Ultrasector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Strategy and Financials Ultrasector
The main advantage of trading using opposite Growth Strategy and Financials Ultrasector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Strategy position performs unexpectedly, Financials Ultrasector 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 Financials Ultrasector will offset losses from the drop in Financials Ultrasector'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 |
| Financials Ultrasector vs. Short Real Estate | Financials Ultrasector vs. Short Real Estate | Financials Ultrasector vs. Ultrashort Mid Cap Profund | Financials Ultrasector vs. Ultrashort Mid Cap Profund |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Stocks Directory Find actively traded stocks across global markets | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |