Correlation Between Select Equity and Chase Growth
Can any of the company-specific risk be diversified away by investing in both Select Equity and Chase 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 Equity and Chase 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 Chase Growth Fund, you can compare the effects of market volatilities on Select Equity and Chase 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 Equity with a short position of Chase Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Equity and Chase Growth.
Diversification Opportunities for Select Equity and Chase Growth
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Select and Chase is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Select Equity Fund and Chase Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chase Growth and Select Equity 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 Chase Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chase Growth has no effect on the direction of Select Equity i.e., Select Equity and Chase Growth go up and down completely randomly.
Pair Corralation between Select Equity and Chase Growth
Assuming the 90 days horizon Select Equity is expected to generate 1.11 times less return on investment than Chase Growth. But when comparing it to its historical volatility, Select Equity Fund is 1.25 times less risky than Chase Growth. It trades about 0.38 of its potential returns per unit of risk. Chase Growth Fund is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,644 in Chase Growth Fund on September 1, 2024 and sell it today you would earn a total of 118.00 from holding Chase Growth Fund or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Select Equity Fund vs. Chase Growth Fund
Performance |
| Timeline |
| Select Equity |
| Chase Growth |
Select Equity and Chase Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Equity and Chase Growth
The main advantage of trading using opposite Select Equity and Chase Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Equity position performs unexpectedly, Chase 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 Chase Growth will offset losses from the drop in Chase Growth's long position.| Select Equity vs. Barings Global Floating | Select Equity vs. Dreyfusstandish Global Fixed | Select Equity vs. Blue Current Global | Select Equity vs. Morgan Stanley Global |
| Chase Growth vs. The Chesapeake Growth | Chase Growth vs. Aston Montag Caldwell | Chase Growth vs. The Jensen Portfolio | Chase Growth vs. Cambiar Opportunity Fund |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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