Correlation Between Global Growth and Disciplined Growth
Can any of the company-specific risk be diversified away by investing in both Global Growth and Disciplined 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 Global Growth and Disciplined Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Growth Fund and Disciplined Growth Fund, you can compare the effects of market volatilities on Global Growth and Disciplined 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 Global Growth with a short position of Disciplined Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Growth and Disciplined Growth.
Diversification Opportunities for Global Growth and Disciplined Growth
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Disciplined is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Global Growth Fund and Disciplined Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Disciplined Growth and Global 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 Global Growth Fund are associated (or correlated) with Disciplined Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Disciplined Growth has no effect on the direction of Global Growth i.e., Global Growth and Disciplined Growth go up and down completely randomly.
Pair Corralation between Global Growth and Disciplined Growth
Assuming the 90 days horizon Global Growth Fund is expected to generate 0.78 times more return on investment than Disciplined Growth. However, Global Growth Fund is 1.29 times less risky than Disciplined Growth. It trades about -0.11 of its potential returns per unit of risk. Disciplined Growth Fund is currently generating about -0.13 per unit of risk. If you would invest 1,099 in Global Growth Fund on January 21, 2025 and sell it today you would lose (77.00) from holding Global Growth Fund or give up 7.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Growth Fund vs. Disciplined Growth Fund
Performance |
| Timeline |
| Global Growth |
| Disciplined Growth |
Global Growth and Disciplined Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Growth and Disciplined Growth
The main advantage of trading using opposite Global Growth and Disciplined Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Growth position performs unexpectedly, Disciplined 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 Disciplined Growth will offset losses from the drop in Disciplined Growth's long position.| Global Growth vs. Emerging Markets Fund | Global Growth vs. International Growth Fund | Global Growth vs. Heritage Fund Investor | Global Growth vs. Select Fund Investor |
| Disciplined Growth vs. Financial Industries Fund | Disciplined Growth vs. Transamerica Financial Life | Disciplined Growth vs. John Hancock Financial | Disciplined Growth vs. Goldman Sachs Financial |
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 CEOs Directory module to screen CEOs from public companies around the world.
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