Correlation Between Global Growth and Value Fund
Can any of the company-specific risk be diversified away by investing in both Global 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 Global 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 Global Growth Fund and Value Fund I, you can compare the effects of market volatilities on Global 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 Global Growth with a short position of Value Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Growth and Value Fund.
Diversification Opportunities for Global Growth and Value Fund
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Value is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Global 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 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 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 Global Growth i.e., Global Growth and Value Fund go up and down completely randomly.
Pair Corralation between Global Growth and Value Fund
Assuming the 90 days horizon Global Growth Fund is expected to generate 1.94 times more return on investment than Value Fund. However, Global Growth is 1.94 times more volatile than Value Fund I. It trades about 0.21 of its potential returns per unit of risk. Value Fund I is currently generating about 0.36 per unit of risk. If you would invest 1,080 in Global Growth Fund on October 23, 2024 and sell it today you would earn a total of 40.00 from holding Global Growth Fund or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Global Growth Fund vs. Value Fund I
Performance |
| Timeline |
| Global Growth |
| Value Fund I |
Global Growth and Value Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Growth and Value Fund
The main advantage of trading using opposite Global Growth and Value Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global 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.| Global Growth vs. Emerging Markets Fund | Global Growth vs. International Growth Fund | Global Growth vs. Heritage Fund Investor | Global Growth vs. Select Fund Investor |
| Value Fund vs. Towpath Technology | Value Fund vs. Technology Ultrasector Profund | Value Fund vs. Columbia Global Technology | Value Fund vs. Global Technology Portfolio |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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