Correlation Between Global Growth and One Choice
Can any of the company-specific risk be diversified away by investing in both Global Growth and One Choice 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 One Choice 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 One Choice 2050, you can compare the effects of market volatilities on Global Growth and One Choice 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 One Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Growth and One Choice.
Diversification Opportunities for Global Growth and One Choice
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and One is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Global Growth Fund and One Choice 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice 2050 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 One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice 2050 has no effect on the direction of Global Growth i.e., Global Growth and One Choice go up and down completely randomly.
Pair Corralation between Global Growth and One Choice
Assuming the 90 days horizon Global Growth is expected to generate 1.05 times less return on investment than One Choice. In addition to that, Global Growth is 1.59 times more volatile than One Choice 2050. It trades about 0.06 of its total potential returns per unit of risk. One Choice 2050 is currently generating about 0.1 per unit of volatility. If you would invest 1,454 in One Choice 2050 on September 3, 2024 and sell it today you would earn a total of 135.00 from holding One Choice 2050 or generate 9.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Growth Fund vs. One Choice 2050
Performance |
| Timeline |
| Global Growth |
| One Choice 2050 |
Global Growth and One Choice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Growth and One Choice
The main advantage of trading using opposite Global Growth and One Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Growth position performs unexpectedly, One Choice 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 One Choice will offset losses from the drop in One Choice'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 |
| One Choice vs. Vanguard Target Retirement | One Choice vs. American Funds 2050 | One Choice vs. American Funds 2050 | One Choice vs. American Funds 2050 |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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