Correlation Between International Growth and Value Fund
Can any of the company-specific risk be diversified away by investing in both International Growth and Value Fund 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 Value Fund 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 Value Fund I, you can compare the effects of market volatilities on International Growth and Value Fund 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 Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Growth and Value Fund.
Diversification Opportunities for International Growth and Value Fund
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Value is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding International Growth Fund and Value Fund I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Fund I 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 Value Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Fund I has no effect on the direction of International Growth i.e., International Growth and Value Fund go up and down completely randomly.
Pair Corralation between International Growth and Value Fund
Assuming the 90 days horizon International Growth Fund is expected to generate 1.49 times more return on investment than Value Fund. However, International Growth is 1.49 times more volatile than Value Fund I. It trades about 0.26 of its potential returns per unit of risk. Value Fund I is currently generating about 0.3 per unit of risk. If you would invest 1,230 in International Growth Fund on November 3, 2024 and sell it today you would earn a total of 62.00 from holding International Growth Fund or generate 5.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Growth Fund vs. Value Fund I
Performance |
| Timeline |
| International Growth |
| Value Fund I |
International Growth and Value Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Growth and Value Fund
The main advantage of trading using opposite International Growth and Value Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Growth position performs unexpectedly, Value Fund 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 Value Fund will offset losses from the drop in Value Fund's long position.The idea behind International Growth Fund and Value Fund I pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Value Fund vs. Federated Government Income | Value Fund vs. Virtus Seix Government | Value Fund vs. Hsbc Government Money | Value Fund vs. Intermediate Government 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |