Correlation Between Growth Fund and Small-cap Value
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Small-cap Value 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 Small-cap Value 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 Small Cap Value Fund, you can compare the effects of market volatilities on Growth Fund and Small-cap Value 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 Small-cap Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Small-cap Value.
Diversification Opportunities for Growth Fund and Small-cap Value
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GROWTH and Small-cap is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Small Cap Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value 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 Small-cap Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Growth Fund i.e., Growth Fund and Small-cap Value go up and down completely randomly.
Pair Corralation between Growth Fund and Small-cap Value
Assuming the 90 days horizon Growth Fund Of is expected to generate 0.96 times more return on investment than Small-cap Value. However, Growth Fund Of is 1.04 times less risky than Small-cap Value. It trades about 0.06 of its potential returns per unit of risk. Small Cap Value Fund is currently generating about -0.03 per unit of risk. If you would invest 7,143 in Growth Fund Of on October 26, 2024 and sell it today you would earn a total of 644.00 from holding Growth Fund Of or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Small Cap Value Fund
Performance |
| Timeline |
| Growth Fund |
| Small Cap Value |
Growth Fund and Small-cap Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Small-cap Value
The main advantage of trading using opposite Growth Fund and Small-cap Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Small-cap Value 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 Small-cap Value will offset losses from the drop in Small-cap Value's long position.| Growth Fund vs. Prudential Health Sciences | Growth Fund vs. Alphacentric Lifesci Healthcare | Growth Fund vs. Invesco Global Health | Growth Fund vs. Live Oak Health |
| Small-cap Value vs. Rbb Fund | Small-cap Value vs. Rational Dividend Capture | Small-cap Value vs. Growth Fund Of | Small-cap Value vs. T Rowe Price |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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