Correlation Between Balanced Fund and Auer Growth
Can any of the company-specific risk be diversified away by investing in both Balanced Fund 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 Balanced Fund and Auer Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Investor and Auer Growth Fund, you can compare the effects of market volatilities on Balanced Fund 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 Balanced Fund with a short position of Auer Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Auer Growth.
Diversification Opportunities for Balanced Fund and Auer Growth
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Balanced and Auer is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor 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 Balanced Fund 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 Balanced Fund Investor 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 Balanced Fund i.e., Balanced Fund and Auer Growth go up and down completely randomly.
Pair Corralation between Balanced Fund and Auer Growth
Assuming the 90 days horizon Balanced Fund is expected to generate 1.13 times less return on investment than Auer Growth. But when comparing it to its historical volatility, Balanced Fund Investor is 2.15 times less risky than Auer Growth. It trades about 0.09 of its potential returns per unit of risk. Auer Growth Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,390 in Auer Growth Fund on August 25, 2024 and sell it today you would earn a total of 388.00 from holding Auer Growth Fund or generate 27.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Investor vs. Auer Growth Fund
Performance |
| Timeline |
| Balanced Fund Investor |
| Auer Growth Fund |
Balanced Fund and Auer Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Auer Growth
The main advantage of trading using opposite Balanced Fund and Auer Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund 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.| Balanced Fund vs. Select Fund Investor | Balanced Fund vs. Heritage Fund Investor | Balanced Fund vs. Value Fund Investor | Balanced Fund vs. Growth Fund Investor |
| 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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