Correlation Between Growth Opportunities and Sierra Core
Can any of the company-specific risk be diversified away by investing in both Growth Opportunities and Sierra Core 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 Sierra Core 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 Sierra E Retirement, you can compare the effects of market volatilities on Growth Opportunities and Sierra Core 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 Sierra Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Opportunities and Sierra Core.
Diversification Opportunities for Growth Opportunities and Sierra Core
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Growth and Sierra is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Growth Opportunities Fund and Sierra E Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra E Retirement 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 Sierra Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra E Retirement has no effect on the direction of Growth Opportunities i.e., Growth Opportunities and Sierra Core go up and down completely randomly.
Pair Corralation between Growth Opportunities and Sierra Core
Assuming the 90 days horizon Growth Opportunities Fund is expected to generate 3.44 times more return on investment than Sierra Core. However, Growth Opportunities is 3.44 times more volatile than Sierra E Retirement. It trades about 0.12 of its potential returns per unit of risk. Sierra E Retirement is currently generating about 0.07 per unit of risk. If you would invest 3,324 in Growth Opportunities Fund on September 3, 2024 and sell it today you would earn a total of 2,532 from holding Growth Opportunities Fund or generate 76.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Opportunities Fund vs. Sierra E Retirement
Performance |
| Timeline |
| Growth Opportunities |
| Sierra E Retirement |
Growth Opportunities and Sierra Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Opportunities and Sierra Core
The main advantage of trading using opposite Growth Opportunities and Sierra Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Opportunities position performs unexpectedly, Sierra Core 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 Sierra Core will offset losses from the drop in Sierra Core'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 |
| Sierra Core vs. Gmo High Yield | Sierra Core vs. Artisan High Income | Sierra Core vs. Pace High Yield | Sierra Core vs. Guggenheim High Yield |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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