Correlation Between Smallcap World and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Smallcap World and Growth Fund 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 Smallcap World and Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap World Fund and Growth Fund Of, you can compare the effects of market volatilities on Smallcap World and Growth Fund 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 Smallcap World with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap World and Growth Fund.
Diversification Opportunities for Smallcap World and Growth Fund
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smallcap and Growth is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap World Fund and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund and Smallcap World 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 Smallcap World Fund are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Smallcap World i.e., Smallcap World and Growth Fund go up and down completely randomly.
Pair Corralation between Smallcap World and Growth Fund
Assuming the 90 days horizon Smallcap World Fund is expected to under-perform the Growth Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Smallcap World Fund is 1.02 times less risky than Growth Fund. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Growth Fund Of is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 7,715 in Growth Fund Of on November 28, 2024 and sell it today you would lose (129.00) from holding Growth Fund Of or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Smallcap World Fund vs. Growth Fund Of
Performance |
| Timeline |
| Smallcap World |
| Growth Fund |
Smallcap World and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap World and Growth Fund
The main advantage of trading using opposite Smallcap World and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap World position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.| Smallcap World vs. Vest Large Cap | Smallcap World vs. Calvert Large Cap | Smallcap World vs. Tax Managed Large Cap | Smallcap World vs. Fisher Large Cap |
| Growth Fund vs. Capital World Growth | Growth Fund vs. Europacific Growth Fund | Growth Fund vs. New Perspective Fund | Growth Fund vs. Investment Of America |
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.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |