Correlation Between Growth Opportunities and Total Return
Can any of the company-specific risk be diversified away by investing in both Growth Opportunities and Total Return 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 Growth Opportunities and Total Return into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Opportunities Fund and Total Return Fund, you can compare the effects of market volatilities on Growth Opportunities and Total Return 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 Growth Opportunities with a short position of Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Opportunities and Total Return.
Diversification Opportunities for Growth Opportunities and Total Return
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Growth and Total is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Growth Opportunities Fund and Total Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return and Growth Opportunities 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 Growth Opportunities Fund are associated (or correlated) with Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return has no effect on the direction of Growth Opportunities i.e., Growth Opportunities and Total Return go up and down completely randomly.
Pair Corralation between Growth Opportunities and Total Return
Assuming the 90 days horizon Growth Opportunities Fund is expected to generate 3.43 times more return on investment than Total Return. However, Growth Opportunities is 3.43 times more volatile than Total Return Fund. It trades about 0.17 of its potential returns per unit of risk. Total Return Fund is currently generating about 0.09 per unit of risk. If you would invest 5,096 in Growth Opportunities Fund on August 28, 2024 and sell it today you would earn a total of 205.00 from holding Growth Opportunities Fund or generate 4.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Opportunities Fund vs. Total Return Fund
Performance |
| Timeline |
| Growth Opportunities |
| Total Return |
Growth Opportunities and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Opportunities and Total Return
The main advantage of trading using opposite Growth Opportunities and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Opportunities position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.| Growth Opportunities vs. Large Cap Fund | Growth Opportunities vs. Nicholas Ii Inc | Growth Opportunities vs. Mid Cap Value | Growth Opportunities vs. Tcw Relative Value |
| Total Return vs. Total Return Fund | Total Return vs. High Yield Fund | Total Return vs. Mid Cap Growth | Total Return vs. Pimco Foreign Bond |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |