Correlation Between Select Us and Equity Growth
Can any of the company-specific risk be diversified away by investing in both Select Us and Equity 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 Select Us and Equity Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Equity Fund and Equity Growth Strategy, you can compare the effects of market volatilities on Select Us and Equity 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 Select Us with a short position of Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Us and Equity Growth.
Diversification Opportunities for Select Us and Equity Growth
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Select and Equity is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Select Equity Fund and Equity Growth Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth Strategy and Select Us 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 Select Equity Fund are associated (or correlated) with Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth Strategy has no effect on the direction of Select Us i.e., Select Us and Equity Growth go up and down completely randomly.
Pair Corralation between Select Us and Equity Growth
Assuming the 90 days horizon Select Us is expected to generate 1.66 times less return on investment than Equity Growth. In addition to that, Select Us is 2.06 times more volatile than Equity Growth Strategy. It trades about 0.03 of its total potential returns per unit of risk. Equity Growth Strategy is currently generating about 0.1 per unit of volatility. If you would invest 1,181 in Equity Growth Strategy on December 1, 2024 and sell it today you would earn a total of 426.00 from holding Equity Growth Strategy or generate 36.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Equity Fund vs. Equity Growth Strategy
Performance |
| Timeline |
| Select Equity |
| Equity Growth Strategy |
Select Us and Equity Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Us and Equity Growth
The main advantage of trading using opposite Select Us and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Us position performs unexpectedly, Equity 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 Equity Growth will offset losses from the drop in Equity Growth's long position.| Select Us vs. Us Government Securities | Select Us vs. Us Government Securities | Select Us vs. John Hancock Government | Select Us vs. Transamerica Funds |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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