Correlation Between Growth Fund and Short Duration
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Short Duration 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 Short Duration 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 Short Duration Income, you can compare the effects of market volatilities on Growth Fund and Short Duration 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 Short Duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Short Duration.
Diversification Opportunities for Growth Fund and Short Duration
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Growth and Short is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Short Duration Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Duration 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 Short Duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Duration Income has no effect on the direction of Growth Fund i.e., Growth Fund and Short Duration go up and down completely randomly.
Pair Corralation between Growth Fund and Short Duration
Assuming the 90 days horizon Growth Fund Of is expected to generate 7.65 times more return on investment than Short Duration. However, Growth Fund is 7.65 times more volatile than Short Duration Income. It trades about 0.12 of its potential returns per unit of risk. Short Duration Income is currently generating about 0.18 per unit of risk. If you would invest 4,704 in Growth Fund Of on August 30, 2024 and sell it today you would earn a total of 3,388 from holding Growth Fund Of or generate 72.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Short Duration Income
Performance |
| Timeline |
| Growth Fund |
| Short Duration Income |
Growth Fund and Short Duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Short Duration
The main advantage of trading using opposite Growth Fund and Short Duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Short Duration 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 Short Duration will offset losses from the drop in Short Duration's 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 |
| Short Duration vs. Victory High Income | Short Duration vs. Needham Aggressive Growth | Short Duration vs. Morningstar Aggressive Growth | Short Duration vs. Calvert High Yield |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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