Correlation Between Growth Fund and Europacific Growth
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Europacific Growth 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 Europacific Growth 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 Europacific Growth Fund, you can compare the effects of market volatilities on Growth Fund and Europacific Growth 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 Europacific Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Europacific Growth.
Diversification Opportunities for Growth Fund and Europacific Growth
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Growth and Europacific is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Europacific Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europacific Growth 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 Europacific Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europacific Growth has no effect on the direction of Growth Fund i.e., Growth Fund and Europacific Growth go up and down completely randomly.
Pair Corralation between Growth Fund and Europacific Growth
Assuming the 90 days horizon Growth Fund Of is expected to generate 1.3 times more return on investment than Europacific Growth. However, Growth Fund is 1.3 times more volatile than Europacific Growth Fund. It trades about 0.1 of its potential returns per unit of risk. Europacific Growth Fund is currently generating about 0.05 per unit of risk. If you would invest 6,164 in Growth Fund Of on September 2, 2024 and sell it today you would earn a total of 1,751 from holding Growth Fund Of or generate 28.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Europacific Growth Fund
Performance |
| Timeline |
| Growth Fund |
| Europacific Growth |
Growth Fund and Europacific Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Europacific Growth
The main advantage of trading using opposite Growth Fund and Europacific Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Europacific Growth 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 Europacific Growth will offset losses from the drop in Europacific Growth's long position.| Growth Fund vs. Federated Global Allocation | Growth Fund vs. Us Global Investors | Growth Fund vs. T Rowe Price | Growth Fund vs. Wisdomtree Siegel Global |
| Europacific Growth vs. Vanguard Institutional Index | Europacific Growth vs. Vanguard Mid Cap Index | Europacific Growth vs. Washington Mutual Investors | Europacific Growth vs. Vanguard Small Cap Index |
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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