Correlation Between Growth Fund and At Equity
Can any of the company-specific risk be diversified away by investing in both Growth Fund and At Equity 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 At Equity 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 At Equity Income, you can compare the effects of market volatilities on Growth Fund and At Equity 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 At Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and At Equity.
Diversification Opportunities for Growth Fund and At Equity
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Growth and AWYIX is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and At Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on At Equity Income 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 At Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of At Equity Income has no effect on the direction of Growth Fund i.e., Growth Fund and At Equity go up and down completely randomly.
Pair Corralation between Growth Fund and At Equity
Assuming the 90 days horizon Growth Fund Of is expected to under-perform the At Equity. In addition to that, Growth Fund is 1.62 times more volatile than At Equity Income. It trades about -0.08 of its total potential returns per unit of risk. At Equity Income is currently generating about -0.05 per unit of volatility. If you would invest 6,059 in At Equity Income on November 27, 2024 and sell it today you would lose (36.00) from holding At Equity Income or give up 0.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. At Equity Income
Performance |
| Timeline |
| Growth Fund |
| At Equity Income |
Growth Fund and At Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and At Equity
The main advantage of trading using opposite Growth Fund and At Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, At Equity 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 At Equity will offset losses from the drop in At Equity's long position.| Growth Fund vs. Europacific Growth Fund | Growth Fund vs. Capital World Growth | Growth Fund vs. Smallcap World Fund | Growth Fund vs. American Balanced Fund |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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