Correlation Between Firsthand Technology and Growth Opportunities
Can any of the company-specific risk be diversified away by investing in both Firsthand Technology and Growth Opportunities 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 Firsthand Technology and Growth Opportunities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firsthand Technology Opportunities and Growth Opportunities Fund, you can compare the effects of market volatilities on Firsthand Technology and Growth Opportunities 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 Firsthand Technology with a short position of Growth Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Technology and Growth Opportunities.
Diversification Opportunities for Firsthand Technology and Growth Opportunities
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Firsthand and Growth is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Technology Opportuni and Growth Opportunities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Opportunities and Firsthand Technology 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 Firsthand Technology Opportunities are associated (or correlated) with Growth Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Opportunities has no effect on the direction of Firsthand Technology i.e., Firsthand Technology and Growth Opportunities go up and down completely randomly.
Pair Corralation between Firsthand Technology and Growth Opportunities
Assuming the 90 days horizon Firsthand Technology Opportunities is expected to under-perform the Growth Opportunities. In addition to that, Firsthand Technology is 1.69 times more volatile than Growth Opportunities Fund. It trades about -0.01 of its total potential returns per unit of risk. Growth Opportunities Fund is currently generating about 0.13 per unit of volatility. If you would invest 3,931 in Growth Opportunities Fund on September 12, 2024 and sell it today you would earn a total of 1,971 from holding Growth Opportunities Fund or generate 50.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.7% |
| Values | Daily Returns |
Firsthand Technology Opportuni vs. Growth Opportunities Fund
Performance |
| Timeline |
| Firsthand Technology |
| Growth Opportunities |
Firsthand Technology and Growth Opportunities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firsthand Technology and Growth Opportunities
The main advantage of trading using opposite Firsthand Technology and Growth Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Technology position performs unexpectedly, Growth Opportunities 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 Opportunities will offset losses from the drop in Growth Opportunities' long position.| Firsthand Technology vs. Berkshire Focus | Firsthand Technology vs. Red Oak Technology | Firsthand Technology vs. Jacob Internet Fund | Firsthand Technology vs. Kinetics Internet 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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