Correlation Between Growth Fund and Emerald Insights
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Emerald Insights 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 Emerald Insights 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 Emerald Insights Fund, you can compare the effects of market volatilities on Growth Fund and Emerald Insights 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 Emerald Insights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Emerald Insights.
Diversification Opportunities for Growth Fund and Emerald Insights
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and Emerald is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Emerald Insights Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Insights 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 Emerald Insights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Insights has no effect on the direction of Growth Fund i.e., Growth Fund and Emerald Insights go up and down completely randomly.
Pair Corralation between Growth Fund and Emerald Insights
Assuming the 90 days horizon Growth Fund Of is expected to generate 0.76 times more return on investment than Emerald Insights. However, Growth Fund Of is 1.32 times less risky than Emerald Insights. It trades about 0.2 of its potential returns per unit of risk. Emerald Insights Fund is currently generating about 0.14 per unit of risk. If you would invest 7,784 in Growth Fund Of on August 29, 2024 and sell it today you would earn a total of 344.00 from holding Growth Fund Of or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Emerald Insights Fund
Performance |
| Timeline |
| Growth Fund |
| Emerald Insights |
Growth Fund and Emerald Insights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Emerald Insights
The main advantage of trading using opposite Growth Fund and Emerald Insights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Emerald Insights 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 Emerald Insights will offset losses from the drop in Emerald Insights' long position.| Growth Fund vs. Old Westbury Short Term | Growth Fund vs. Franklin Federal Limited Term | Growth Fund vs. Rbc Short Duration | Growth Fund vs. Aqr Long Short Equity |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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