Correlation Between Growth Fund and International Growth
Can any of the company-specific risk be diversified away by investing in both Growth Fund and International 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 Growth Fund and International Growth 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 International Growth Fund, you can compare the effects of market volatilities on Growth Fund and International 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 Growth Fund with a short position of International Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and International Growth.
Diversification Opportunities for Growth Fund and International Growth
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Growth and International is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund I and International Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Growth 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 International Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Growth has no effect on the direction of Growth Fund i.e., Growth Fund and International Growth go up and down completely randomly.
Pair Corralation between Growth Fund and International Growth
Assuming the 90 days horizon Growth Fund I is expected to generate 1.47 times more return on investment than International Growth. However, Growth Fund is 1.47 times more volatile than International Growth Fund. It trades about 0.06 of its potential returns per unit of risk. International Growth Fund is currently generating about -0.13 per unit of risk. If you would invest 6,188 in Growth Fund I on August 30, 2024 and sell it today you would earn a total of 80.00 from holding Growth Fund I or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund I vs. International Growth Fund
Performance |
| Timeline |
| Growth Fund I |
| International Growth |
Growth Fund and International Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and International Growth
The main advantage of trading using opposite Growth Fund and International Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, International 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 International Growth will offset losses from the drop in International Growth'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 |
| International Growth vs. Europacific Growth Fund | International Growth vs. Europacific Growth Fund | International Growth vs. Europacific Growth Fund | International Growth vs. Europacific Growth Fund |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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