Correlation Between International Growth and Europacific Growth
Can any of the company-specific risk be diversified away by investing in both International Growth 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 International Growth and Europacific Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Growth Fund and Europacific Growth Fund, you can compare the effects of market volatilities on International Growth 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 International Growth with a short position of Europacific Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Growth and Europacific Growth.
Diversification Opportunities for International Growth and Europacific Growth
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between International and Europacific is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding International Growth Fund and Europacific Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europacific Growth and International Growth 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 International Growth Fund 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 International Growth i.e., International Growth and Europacific Growth go up and down completely randomly.
Pair Corralation between International Growth and Europacific Growth
Assuming the 90 days horizon International Growth Fund is expected to generate 1.08 times more return on investment than Europacific Growth. However, International Growth is 1.08 times more volatile than Europacific Growth Fund. It trades about 0.06 of its potential returns per unit of risk. Europacific Growth Fund is currently generating about 0.04 per unit of risk. If you would invest 1,256 in International Growth Fund on September 1, 2024 and sell it today you would earn a total of 12.00 from holding International Growth Fund or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
International Growth Fund vs. Europacific Growth Fund
Performance |
| Timeline |
| International Growth |
| Europacific Growth |
International Growth and Europacific Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Growth and Europacific Growth
The main advantage of trading using opposite International Growth and Europacific Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Growth 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.| International Growth vs. Legg Mason Bw | International Growth vs. Tax Managed Large Cap | International Growth vs. John Hancock Investment | International Growth vs. Fundamental Large Cap |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Stocks Directory Find actively traded stocks across global markets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |