Correlation Between Growth Fund and Small Midcap
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Small Midcap 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 Midcap 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 Midcap Dividend Income, you can compare the effects of market volatilities on Growth Fund and Small Midcap 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 Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Small Midcap.
Diversification Opportunities for Growth Fund and Small Midcap
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Growth and Small is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Small Midcap Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Midcap Dividend 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 Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Midcap Dividend has no effect on the direction of Growth Fund i.e., Growth Fund and Small Midcap go up and down completely randomly.
Pair Corralation between Growth Fund and Small Midcap
Assuming the 90 days horizon Growth Fund Of is expected to generate 1.07 times more return on investment than Small Midcap. However, Growth Fund is 1.07 times more volatile than Small Midcap Dividend Income. It trades about 0.17 of its potential returns per unit of risk. Small Midcap Dividend Income is currently generating about 0.16 per unit of risk. If you would invest 7,469 in Growth Fund Of on November 4, 2024 and sell it today you would earn a total of 256.00 from holding Growth Fund Of or generate 3.43% 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 Midcap Dividend Income
Performance |
| Timeline |
| Growth Fund |
| Small Midcap Dividend |
Growth Fund and Small Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Small Midcap
The main advantage of trading using opposite Growth Fund and Small Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Small Midcap 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 Midcap will offset losses from the drop in Small Midcap's long position.| Growth Fund vs. Schwab Government Money | Growth Fund vs. Ab Government Exchange | Growth Fund vs. Gabelli Global Financial | Growth Fund vs. Vanguard Money Market |
| Small Midcap vs. Rbb Fund | Small Midcap vs. Barings Global Floating | Small Midcap vs. L Abbett Growth | Small Midcap vs. Alliancebernstein Global Highome |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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