Correlation Between Growth Fund and Amcap Fund
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Amcap Fund 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 Amcap Fund 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 Amcap Fund Class, you can compare the effects of market volatilities on Growth Fund and Amcap Fund 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 Amcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Amcap Fund.
Diversification Opportunities for Growth Fund and Amcap Fund
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and Amcap is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Amcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amcap Fund Class 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 Amcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amcap Fund Class has no effect on the direction of Growth Fund i.e., Growth Fund and Amcap Fund go up and down completely randomly.
Pair Corralation between Growth Fund and Amcap Fund
Assuming the 90 days horizon Growth Fund Of is expected to generate 1.03 times more return on investment than Amcap Fund. However, Growth Fund is 1.03 times more volatile than Amcap Fund Class. It trades about 0.17 of its potential returns per unit of risk. Amcap Fund Class is currently generating about 0.12 per unit of risk. If you would invest 7,810 in Growth Fund Of on August 31, 2024 and sell it today you would earn a total of 282.00 from holding Growth Fund Of or generate 3.61% 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. Amcap Fund Class
Performance |
| Timeline |
| Growth Fund |
| Amcap Fund Class |
Growth Fund and Amcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Amcap Fund
The main advantage of trading using opposite Growth Fund and Amcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Amcap Fund 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 Amcap Fund will offset losses from the drop in Amcap Fund's long position.| Growth Fund vs. Kinetics Small Cap | Growth Fund vs. Small Pany Growth | Growth Fund vs. Tfa Alphagen Growth | Growth Fund vs. T Rowe Price |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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