Correlation Between Growth Fund and Intermediate Term
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Intermediate Term 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 Intermediate Term 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 Intermediate Term Tax Free Bond, you can compare the effects of market volatilities on Growth Fund and Intermediate Term 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 Intermediate Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Intermediate Term.
Diversification Opportunities for Growth Fund and Intermediate Term
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Growth and Intermediate is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund I and Intermediate Term Tax Free Bon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Term Tax 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 Intermediate Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Term Tax has no effect on the direction of Growth Fund i.e., Growth Fund and Intermediate Term go up and down completely randomly.
Pair Corralation between Growth Fund and Intermediate Term
Assuming the 90 days horizon Growth Fund I is expected to generate 6.37 times more return on investment than Intermediate Term. However, Growth Fund is 6.37 times more volatile than Intermediate Term Tax Free Bond. It trades about 0.06 of its potential returns per unit of risk. Intermediate Term Tax Free Bond is currently generating about 0.06 per unit of risk. If you would invest 5,531 in Growth Fund I on August 27, 2024 and sell it today you would earn a total of 712.00 from holding Growth Fund I or generate 12.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund I vs. Intermediate Term Tax Free Bon
Performance |
| Timeline |
| Growth Fund I |
| Intermediate Term Tax |
Growth Fund and Intermediate Term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Intermediate Term
The main advantage of trading using opposite Growth Fund and Intermediate Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Intermediate Term 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 Intermediate Term will offset losses from the drop in Intermediate Term's long position.| Growth Fund vs. International Growth Fund | Growth Fund vs. Heritage Fund Investor | Growth Fund vs. Janus Global Research |
| Intermediate Term vs. Mid Cap Value | Intermediate Term vs. Equity Growth Fund | Intermediate Term vs. Income Growth Fund | Intermediate Term vs. Diversified Bond 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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