Correlation Between Growth Fund and Select Fund
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Select 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 Growth Fund and Select Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund I and Select Fund R, you can compare the effects of market volatilities on Growth Fund and Select 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 Growth Fund with a short position of Select Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Select Fund.
Diversification Opportunities for Growth Fund and Select Fund
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Growth and Select is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund I and Select Fund R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Fund R and Growth 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 Growth Fund I are associated (or correlated) with Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund R has no effect on the direction of Growth Fund i.e., Growth Fund and Select Fund go up and down completely randomly.
Pair Corralation between Growth Fund and Select Fund
Assuming the 90 days horizon Growth Fund I is expected to generate 1.04 times more return on investment than Select Fund. However, Growth Fund is 1.04 times more volatile than Select Fund R. It trades about 0.09 of its potential returns per unit of risk. Select Fund R is currently generating about 0.06 per unit of risk. If you would invest 6,134 in Growth Fund I on August 28, 2024 and sell it today you would earn a total of 127.00 from holding Growth Fund I or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund I vs. Select Fund R
Performance |
| Timeline |
| Growth Fund I |
| Select Fund R |
Growth Fund and Select Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Select Fund
The main advantage of trading using opposite Growth Fund and Select Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Select 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 Select Fund will offset losses from the drop in Select Fund's long position.| Growth Fund vs. New Perspective Fund | Growth Fund vs. Investment Of America | Growth Fund vs. Virtus Emerging Markets | Growth Fund vs. Oak Ridge Small |
| Select Fund vs. International Growth Fund | Select Fund vs. Heritage Fund Investor | Select Fund vs. Janus Global Research |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |