Correlation Between Growth Opportunities and Auer Growth
Can any of the company-specific risk be diversified away by investing in both Growth Opportunities and Auer 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 Growth Opportunities and Auer Growth 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 Auer Growth Fund, you can compare the effects of market volatilities on Growth Opportunities and Auer 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 Growth Opportunities with a short position of Auer Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Opportunities and Auer Growth.
Diversification Opportunities for Growth Opportunities and Auer Growth
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Growth and Auer is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Growth Opportunities Fund and Auer Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auer Growth Fund 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 Auer Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auer Growth Fund has no effect on the direction of Growth Opportunities i.e., Growth Opportunities and Auer Growth go up and down completely randomly.
Pair Corralation between Growth Opportunities and Auer Growth
Assuming the 90 days horizon Growth Opportunities Fund is expected to generate 0.88 times more return on investment than Auer Growth. However, Growth Opportunities Fund is 1.13 times less risky than Auer Growth. It trades about 0.11 of its potential returns per unit of risk. Auer Growth Fund is currently generating about 0.05 per unit of risk. If you would invest 3,358 in Growth Opportunities Fund on September 3, 2024 and sell it today you would earn a total of 2,498 from holding Growth Opportunities Fund or generate 74.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Opportunities Fund vs. Auer Growth Fund
Performance |
| Timeline |
| Growth Opportunities |
| Auer Growth Fund |
Growth Opportunities and Auer Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Opportunities and Auer Growth
The main advantage of trading using opposite Growth Opportunities and Auer Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Opportunities position performs unexpectedly, Auer 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 Auer Growth will offset losses from the drop in Auer Growth's long position.| Growth Opportunities vs. Victory Rs Partners | Growth Opportunities vs. Lord Abbett Small | Growth Opportunities vs. Hennessy Nerstone Mid | Growth Opportunities vs. Fpa Queens Road |
| Auer Growth vs. Lebenthal Lisanti Small | Auer Growth vs. Hodges Small Cap | Auer Growth vs. Schwartz Value Focused | Auer Growth vs. Oberweis Small Cap Opportunities |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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