Correlation Between Growth Fund and Park Electrochemical
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Park Electrochemical 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 Park Electrochemical 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 Park Electrochemical, you can compare the effects of market volatilities on Growth Fund and Park Electrochemical 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 Park Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Park Electrochemical.
Diversification Opportunities for Growth Fund and Park Electrochemical
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Growth and Park is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Park Electrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Electrochemical 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 Park Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Electrochemical has no effect on the direction of Growth Fund i.e., Growth Fund and Park Electrochemical go up and down completely randomly.
Pair Corralation between Growth Fund and Park Electrochemical
Assuming the 90 days horizon Growth Fund Of is expected to generate 0.51 times more return on investment than Park Electrochemical. However, Growth Fund Of is 1.96 times less risky than Park Electrochemical. It trades about 0.1 of its potential returns per unit of risk. Park Electrochemical is currently generating about 0.01 per unit of risk. If you would invest 6,903 in Growth Fund Of on August 27, 2024 and sell it today you would earn a total of 1,290 from holding Growth Fund Of or generate 18.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Park Electrochemical
Performance |
| Timeline |
| Growth Fund |
| Park Electrochemical |
Growth Fund and Park Electrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Park Electrochemical
The main advantage of trading using opposite Growth Fund and Park Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Park Electrochemical 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 Park Electrochemical will offset losses from the drop in Park Electrochemical's long position.| Growth Fund vs. Income Fund Of | Growth Fund vs. New World Fund | Growth Fund vs. American Mutual Fund | Growth Fund vs. American Mutual Fund |
| Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |