Correlation Between Growth Fund and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Emerging Markets 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 Fund and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Emerging Markets Bond, you can compare the effects of market volatilities on Growth Fund and Emerging Markets 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 Fund with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Emerging Markets.
Diversification Opportunities for Growth Fund and Emerging Markets
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Growth and Emerging is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Emerging Markets Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Bond and Growth Fund 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 Fund Of are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Bond has no effect on the direction of Growth Fund i.e., Growth Fund and Emerging Markets go up and down completely randomly.
Pair Corralation between Growth Fund and Emerging Markets
Assuming the 90 days horizon Growth Fund Of is expected to generate 3.59 times more return on investment than Emerging Markets. However, Growth Fund is 3.59 times more volatile than Emerging Markets Bond. It trades about 0.24 of its potential returns per unit of risk. Emerging Markets Bond is currently generating about 0.16 per unit of risk. If you would invest 6,542 in Growth Fund Of on November 3, 2024 and sell it today you would earn a total of 323.00 from holding Growth Fund Of or generate 4.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Emerging Markets Bond
Performance |
| Timeline |
| Growth Fund |
| Emerging Markets Bond |
Growth Fund and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Emerging Markets
The main advantage of trading using opposite Growth Fund and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Capital World Growth | Growth Fund vs. Growth Fund Of | Growth Fund vs. Growth Fund Of |
| Emerging Markets vs. Growth Allocation Fund | Emerging Markets vs. Growth Portfolio Class | Emerging Markets vs. Needham Aggressive Growth | Emerging Markets vs. Artisan Small 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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